Thursday 29 September 2016

Appeal on €1bn Apple tax payout 'would take up to six years'

Shane Phelan, Cormac McQuinn and Kevin Doyle

Published 30/08/2016 | 02:30

Apple boss Tim Cook has repeatedly said he believed the EC would rule in his favour but was prepared to pay any taxes due.
Apple boss Tim Cook has repeatedly said he believed the EC would rule in his favour but was prepared to pay any taxes due.

An appeal by the Government against an EU ruling that Apple's tax arrangements in Ireland were illegal is likely to push back a final decision on the controversy for five or six years.

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The Revenue Commissioners may have to seek billions of euro in back-taxes from the technology giant as a result of an anticipated finding that two tax rulings given to Apple amounted to illegal state aid.

Fix services: John Halligan. Pic Tom Burke
Fix services: John Halligan. Pic Tom Burke

The European Competition Authority will order Ireland to demand back-taxes from Apple today following a two-year investigation. Ireland and Apple say they'll appeal the ruling.

Critics, including the powerful US Treasury Secretary Jack Lew, have accused Brussels of exceeding its remit with this and similar cases, mainly involving US multinationals.

The EU Commission has no authority to tell member states to change their tax rules, but it can act if it finds a company or companies gained an unfair advantage as a result of taxes being levied improperly.

Arrangements are already well advanced for the Government to lodge an appeal on an adverse decision once the European Commission's finding is delivered this morning.

"Absolutely, we will appeal," Jobs Minister Mary Mitchell O'Connor said, denying that there was a 'sweetheart deal' with Apple. She added: "We will make sure we are putting Ireland first and that is what we will be doing."

The Apple decision will be top of the agenda when the Cabinet holds it first post-summer meeting tomorrow week.

Mr Noonan has two months and 10 days to lodge the appeal, provided he gets Cabinet approval to do so. A memo circulated to ministers last night said that the US Treasury is likely to speak out against the ruling.

It also noted that if the Government were to accept the money, it may end up having to pay it back in years to come if Apple's appeal against the EU was successful.

Ministers were not told the final figure of tax payback in advance of today's formal announcement but it is expected to be more than €1bn.

Should the appeal fail, the Government can take the issue further to the EU Court of Justice. Legal sources said it could be "up to five or six years" before the appeals process is exhausted.

The Finance Department has retained barristers in Ireland and the UK over the past two years to work on the appeal.

Officials said the general grounds of appeal were relatively simple - that Ireland did not undercharge Apple.

"There is no deal. We don't do deals and we haven't done a deal here. That is the main ground of appeal," said one official.

A preliminary decision, delivered in 2014, found that Apple had been conferred with an unfair advantage as a result of tax rulings it received from the Revenue in 1991 and 2007.

Both the State and Apple have denied the allegations.

Read more: Brussels set to demand years of extra tax payments from Apple

Senior Government figures are deeply worried about the public's reaction to the effective rejection of a potential cash windfall and Opposition TDs have already begun to attack plans for an appeal.

Anti-Austerity Alliance TD Paul Murphy said that seeking to fight the payment of back-taxes amid a homelessness crisis would be "nauseating".

"We will be faced with the ludicrous situation of the Government spending public money fighting a case to ensure that owed taxes aren't paid," Mr Murphy said. Sinn Féin's Pearse Doherty said: "The damage to Ireland's reputation has already been done. Drawing out this process will not change that."

A Finance Department spokesman last night said that it had "no comment" on how much an appeal would cost.

Before the summer break, Finance Minister Michael Noonan told TDs the State had spent €667,000 defending its position so far.

However, a Fine Gael source insisted there had been no wrong-doing on the State's part and asked "why would we accept this attack on our reputation?"

They rejected the suggestion that back-taxes could be used to fund services and housing. The issue is set to be a headache for the minority Government.

Over the weekend, Independent Alliance junior minister John Halligan said any outstanding taxes should be used to fix the health service and build houses.

Mr Noonan briefed Independent Alliance TDs on his position last night.

Irish Independent

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