Of various concerns about the European Commission's ruling on Apple, perhaps the most uncomfortable is that the arrangement between Ireland and Apple is likely to have undermined the development of some of the world's poorest countries.
Regardless of which way the European Court of Justice rules on whether State aid was at play, Apple's use of a stateless entity, notionally located in Ireland, results in countries of the Middle East, India and Africa – as well as in Europe – seeing profit generated in their respective regions being funnelled away from their tax authorities and into Apple Sales International in Ireland.
Apple uses a company structure not unusual among American tech firms in locating its headquarters for operations in these regions in Ireland. But what the commission’s ruling has laid bare is that tax avoidance of this type has serious consequences, with the impact of these being felt by some of the most vulnerable people in the world.
Of course, until the full ruling is publicly available, it is impossible to say how much the various countries in those regions are potentially entitled to. In absolute terms the vast bulk is likely to have been generated in Europe, but even a relatively small amount in an African context has the potential to be transformative – and life-saving.
By way of illustration, in 2011 the entire health budget of Sierra Leone was just under $28 million (€25 m) – a mere 0.21 per cent of the €13 billion Apple is being asked to repay.
All of this of poses serious moral questions for a Government whose aid programme is acknowledged as being among the world’s best, and whose recently updated foreign policy places human rights at its centre. Clearly, a tax policy that undermines the ability of developing countries to raise sufficient revenue to deliver on their human rights obligations is hugely damaging to those countries, but also to Ireland’s international reputation.
There is still strong support, both among the Irish public and most political parties in this country, for Irish international tax policy which has tax competition at its core. However revelations such as these represent a fundamental moral challenge to that support – and one the Government has previously struggled to fashion an appropriate response to.
For example, in early 2015, a report from the UN Economic Commission for Africa (UNECA) estimated that Africa loses as much as $50 billion a year to corporate tax avoidance. The report makes explicit reference to the Double Irish scheme as a means by which companies are able to avoid tax in developing countries. In Budget 2015 the Government moved to close the scheme down. However, instead of doing that immediately, it is gradually phasing it out over five years.
For a country like Sierra Leone, where life expectancy is 51, it must seem vexing, to say the least, to observe a prosperous, wealthy European country allowing a scheme that has been shown to damage the economies of African countries.
The extent to which other companies continue to enjoy the benefits of the Double Irish, or other, as yet unknown, avoidance schemes, at the expense of developing countries, is unclear– or at least is not available publicly. Publicly accessible data about what companies do in each of the countries in which they operate is not yet the industry standard.
Having this data – known as country-by-country reporting – publicly available would make it easier for developing and developed countries to identify instances where companies may be engaging in dubious activities, while also acting as a deterrent to companies considering anti-social tax practices.
The Government has resisted calls from civil society, the European Parliament, and a growing number of industry bodies, to oblige companies to make the data public.
But if Ireland’s tax policy is to continue to be based on competing with other states on lower taxes, the very least the Government should be doing is to insist on the highest levels of transparency from multinationals operating here. Public country-by-country reporting would be an important step in that direction, would restore some faith in the multinational sector, and go some way to rebuilding Ireland’s reputation.
Sorley McCaughey is the head of advocacy and policy at Christian Aid Ireland