Apple ruling is aimed at harming Irish tax regime, claims Noonan

Minister says European Commission trying to end Ireland’s 12.5% corporation tax rate

European Competition Commissioner Margrethe Vestager rejects Apple's criticism that an EU order to the company to pay back taxes to Ireland is political, noting the calculations are based on facts and Apple's own data. Video: REUTERS

 

Minister for Finance Michael Noonan has launched an extraordinary attack on the European Commission and some other member states, claiming they are trying to “establish a bridgehead” to bring down Ireland’s 12.5 per cent corporation tax.

At a press conference Friday to confirm the Cabinet decision to appeal the €13 billion Apple tax ruling, Mr Noonan portrayed the European Commission finding as part of an effort to undermine Ireland’s low rate of corporation tax.

Asked if he though it was an attack on Ireland’s tax policies, he replied: “I do. I think they are establishing a bridgehead. There is a lot of envy across Europe about how successful we are in putting the HQ of so many companies into Ireland and especially into Dublin.

“You will recall the Taoiseach’s first EU meeting in 2011. There was an attempt to bully him, by president [Nicholas] Sarkozy in particular, to bring the corporation tax rate up to 15 per cent as a quid pro quo for the bailout programme that was being offered.

“I think that was a dreadful thing to do at the time and there are still people with the same view that Ireland is doing too well in terms of foreign direct investment and they would like to change the 12.5 per cent regime.”

The Minister, in comments that were seen as unusually abrasive and robust, continued with a thinly disguised criticism of European Commissioner for Competition Margrethe Vestager: “I want to say to international investors and to the Irish people that there will be no change to the 12.5 per cent.

“We stand by the treaty. It’s within our competence to and no bridgehead by any commissioner is going to change that perspective in Ireland. We will fight it at home and abroad and in the courts,” he said.

Mr Noonan, and Minister for Public Expenditure and Reform Paschal Donohoe, portrayed the Government decision as a show of determination and unity by all Ministers, both Fine Gael and Independents.

Both Ministers denied that the Government had vacillated or delayed or had been caught off guard.

“I didn’t expect the decision [from Cabinet] on Wednesday,” said Mr Noonan.

“I went [into the Cabinet meeting] knowing that many of my Fine Gael and Independent colleagues would need time to consider it and would need to take advice.”

The Cabinet agreed early Friday afternoon to appeal the ruling following protracted negotiations since Wednesday.

Independent Ministers had refused until Friday to back the appeal and had set out a number of demands in return for their support.

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Concessions to Independents

The two Independent Alliance Ministers, Shane Ross and Finian McGrath, as well as Independent Minister Katherine Zappone did wring some concessions from Fine Gael in return for their support: namely an early recall of the Dáil, a review of the tax treatment of multinationals in Ireland, and moves towards tax justice and transparency.

The Taoiseach has also agreed to an independent expert carrying out a review of Ireland’s tax system.

The Dáil will reconvene on Wednesday to debate a motion on the Government decision, a fortnight ahead of its schedule return on September 27th.

The motion, which has been seen by The Irish Times, will ask Dáil Éireann to support the Government’s decision to appeal the European Commission’s decision that Ireland provided unlawful State aid to Apple.

The motion will state that it is necessary to take this action “to defend the integrity of our tax system, to provide tax certainty to business; and to challenge the encroachment of EU state aid rules into the sovereign member state competence of taxation.”

In a clear gesture to the Independent Cabinet members, the motion also commits Ireland to the “highest international standards in transparency in the taxation of the corporate sector”. It also resolves that “no company or individual receives preferential tax treatment contrary to the Tax Acts.”

The motion also agrees to a review of Ireland’s corporation tax system by an independent expert to be appointed by the Minister for Finance.

Ms Zappone was involved in extensive discussions on Thursday, including three hours of talks with the Attorney General Máire Whelan. Ms Zappone met Ms Whelan again on Friday morning and also met Taoiseach Enda Kenny and Mr Noonan ahead of the Cabinet meeting.

The meeting, which began at noon, lasted only a short while before an agreement was reached.

John Halligan, the Waterford TD who is a member of the Independent Alliance indicated he would support the motion and dismissed a suggestion that his support would be conditional on progress on commitment for Waterford hospital, saying that was a separate matter.

“Now is not the time to bring down the Government, just before the Budget,” he said.

The Government will now begin to prepare for the appeal, with the Attorney General laying out the legal groups in support of the proceedings. It has two months and 10 days, from the day of the decision last Tuesday, to lodge its appeal to the General Court of the European Union.

Cabinet agreement

According to a statement from Independent TD Kevin “Boxer” Moran, the following is what was agreed to be put before the Dáil:

1. Arrange for annulment proceedings to be brought before the General Court of the European Union (GCEU) on State aid SA. 38373 (2014/C)(ex 2014/NN) (ex 2014/CP) implemented by Ireland to Apple;

2. Request the Attorney General to prepare the legal grounds in support of those proceedings and to take all other steps incidental to the conduct of those proceedings;

3. Propose the following motion before Dáil Eireann:

That Dáil Éireann:

(i) Supports the Government decision to appeal the European Commission’s decision that Ireland provided unlawful State aid to Apple.

(ii) Commits itself to the highest international standards in transparency in the taxation of the corporate sector;

(iii) Resolves that, no company or individual receives preferential tax treatment contrary to the Tax Acts and calls on the Revenue Commissioners to continue to observe this principle;” and

4. To reaffirm Ireland’s 12 and half per cent corporation tax rate

5. To arrange for a review of Ireland’s corporation tax system by an independent expert to be appointed by the Minister for Finance, excluding the 12 and half per cent corporation rate.