Apple tax: IDA chief unravels vexed issue of avoidance and low rate

Chief executive of the Investment and Development Agency (IDA) Martin Shanahan spends much of his time abroad, persuading foreigners to invest in Ireland.

After discussing the EU Commission's €13 billion fine against Apple, as well as Brexit, in New York and London, Mr Shanahan explained Ireland's position in Paris on Wednesday.

He sought to disentangle the issue of tax avoidance by multinationals from Ireland’s low corporate tax rate.

Some 1,200 multinationals have invested in Ireland, said Mr Shanahan. “We are unapologetic about the fact that we have a competitive taxation regime and the fact that our tax rate is 12.5 per cent.”

The idea that low corporate tax was solely responsible for Ireland’s economic success was “simplistic and naive,” said Mr Shanahan said. He emphasised Ireland’s “talent pool, the ease of doing business . . . English-speaking . . . and is an attractive place to live and work”.

Apple, like other foreign investors, had sought an opinion from revenue authorities regarding its tax liability, said Mr Shanahan. “Ireland does not do tax deals. We have never done tax deals.”

Ireland firmly believes that “tax is a sovereign issue for which the EU Commission does not have competence”.

Brexit impact

The Baltic states, Netherlands and Luxembourg share Ireland’s concerns.

"If the EU Commission can rewrite the tax rules of one country retrospectively, they may feel emboldened to do that in other European countries," said Mr Shanahan. "That makes Europe less attractive to foreign direct investment."

Apple paid all it was required to under Irish law. “We are not a collector general for the rest of the world,” said Mr Shanahan. “The Commission suggests that Ireland should have collected this tax . . . yet at the same time the commission says this  tax may be due elsewhere, in another European country or in the US. How both of those things may be possible seems curious to us.”

Ireland’s position was understood in the US and Britain, he said. The British government had discussed lowering its corporate tax rate, even prior to Brexit. On the day the commission announced the Apple decision, Downing Street said Apple would be welcome in London.

Brexit creates “a potential for increased foreign direct investment” in Ireland, said the IDA chief. “Over the past number of weeks, we have seen a significant rise in the amount of interest through our offices across the globe.”

In France, where the government has railed against Irish "fiscal dumping" for decades, and where tax avoidance by multinationals is seen as an outrage, the commission's decision on Apple was popular.

In 2011, then president Nicolas Sarkozy tried to make Ireland's bailout conditional on a higher Irish corporate tax rate.

French attitudes may be changing. The first question asked of Ambassador Geraldine Byrne-Nason at a dinner attended by 300 chief executives this week concerned Ireland’s 7.8 per cent economic growth rate. “How do you do this? What can we learn from you?” asked a French business executive.