Revenue official says taxing 60% of profits here would be ‘travesty’

It would be a "travesty" if 60 per cent of the global profits of Apple were taxed here on the basis of the corporation's branch activities in Cork, a senior Revenue official has said.

Eamonn O'Dea, head of the Revenue's international tax division, said mismatches between the laws of different countries allowed multinationals to avoid tax and he was not defending international tax planning by multinationals. However, Ireland should "object" to the European Commission putting all the blame on Ireland. The Revenue Commissioners had to operate "by applying the Irish tax law".

Mr O'Dea was speaking on RTÉ radio's Morning Ireland programme. It is highly unusual for the Revenue Commissioners to speak publicly about a taxpayer's affairs. It was the commission's view that Ireland was responsible for collecting tax on 60 per cent of Apple's world-wide profits for a decade. Ireland "should not be trying to tax 60 per cent of the global profits of Apple based on their branch in Cork," he added. "It defies common sense."

Irish law made a distinction between companies that were tax resident here and companies that had branch operations here. The two Apple companies at the centre of the current controversy “were not resident companies in Ireland for tax purposes and so were not chargeable on [their] worldwide profits.”

The only profits that could be taxed under Irish law were those produced by the branches in Cork, he said. Apple’s profits were referable to technology, design, marketing, all things that were normally associated with the corporation’s activities in California. “On the back of your phone, you don’t see ‘designed in Cork’,” he said.

Everyone was concerned that a large part of the corporation’s profits were untaxed, he said, but that happened due to a mismatch between the tax laws of two countries.

Ireland should “push back” against the commission’s effort to blame it for the fact there was a mismatch between its tax laws and those of another jurisdiction,

he added. He confirmed that interest would be charged on the tax collected from Apple and that the final figure could be as high as €19 billion.