Labour TD Ged Nash says Ireland’s “over-reliance” on their 12.5% corporation tax rate alongside flexible rules that allow corporations to minimise their taxes is “dangerously unsustainable” after the General Court of the European Union annulled the European Commission’s decision regarding the Irish tax rulings in favour of Apple.
On Wednesday, the GCEU ruled the commission was wrong to declare that Apple Sales International and Apple Operations Europe had been granted a selective economic advantage and, by extension, State aid from the government of Ireland. In their ruling, the GCEU ruled that the commission failed to show “to the requisite legal standard” that Apple enjoyed preferential treatment which amounted to illegal State aid.
Deputy Nash, who is Labour’s new finance spokesperson, said that now is the time for new rules to ensure all multinational corporations pay their fair share of tax in future.
“The General Court of the European Union has effectively ruled that Commissioner Vestager overreached when she ruled against Apple and Ireland. She failed to prove Ireland granted selective treatment or unfair state aid in relation to the tax rules that existed at the time. This is not to say the previous tax rules were satisfactory.
“In fact, since 2014, Ireland has closed the loophole that Apple and other corporations used to minimise the amount of tax they paid here or anywhere. The real issue now is for European governments to agree a decisive step forward to reform the global system for taxing multinationals, especially those in the digital sector that can simply choose where in the world to locate their profit-making intellectual property rights.”
The European Commission is expected to appeal the judgement to the upper court. The case was appealed after, back in 2016, the European Commission directed Ireland to recover €13.1bn in unpaid taxes from Apple covering an 11-year period between 2003 and 2014, as well as €1.2bn in interest.
“For too long our industrial strategy has over-relied on our 12.5% corporation tax rate alongside flexible rules that allow corporations to minimise their taxes,” the Drogheda-based TD said. “This is dangerously unsustainable as we now rely on multinationals for over two-thirds of our corporation tax take as well as a significant amount of other taxes.
“Regardless of the Apple Tax verdict, it is clear these days are numbered. We have already committed to the OECD BEPS programme against international tax evasion which could lower our annual tax revenue by €2-3.5 billion according to IFAC. And the European Commission is now planning an aggressive crackdown on low-tax member state’s such as Ireland via Article 116 of the EU Treaty, which can’t be vetoed.
“From Labour’s perspective, the fact that Apple paid 0.005% in corporation tax while most small companies paid the full 12.5% rate was wrong. Recent reforms need to go further to make our tax system genuinely fair,” he concluded.