Thursday 27 October 2016

Brussels wants more information on Apple's Irish taxes

Donal O'Donovan and Gavin McLoughlin

Published 15/12/2015 | 02:30

European Competition Commissioner Margrethe Vestager. Photo: Jock Fistick/Bloomberg
European Competition Commissioner Margrethe Vestager. Photo: Jock Fistick/Bloomberg

Officials here have been asked to provide further details about taxes paid by Apple, in a sign Europe's long-running Competition probe is unlikely to conclude in the short term.

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The Competition Commission investigation into whether Apple's tax treatment in Ireland was so favourable as to constitute illegal state aid began in June 2014 and had been slated to conclude by the end of this year, after an earlier deadline in June was missed.

However, Minister for Finance Michael Noonan had said he was not expecting a decision this side of Christmas.

The latest move by the Commission, which the Irish Independent understands followed meetings with Irish officials in Brussels last week, means the case is unlikely to conclude before the General Election, which is expected in February.

The current government has said it would appeal any European ruling that found Apple had benefited from state aid here, even though that will mean giving up any back taxes that could fall due as a result.

Mr Noonan has previously stated that he believes the European case against Ireland's tax treatment of Apple "is probably weak" and "more political than legally motivated".

If he returns to office, that sets the scene for a showdown, if Brussels does find against authorities here. Yesterday, a Commission spokeswoman confirmed that requests for additional information have been made to authorities here.

"As in all state aid cases, the Commission has sent several requests for information to Ireland in the course of the ongoing investigation in the Apple case.

"It is standard procedure for the Commission to send information requests to a Member State as part of investigations to gather information on facts relating to possible state aid measures," she said.

The focus of the Commission's investigation is on the calculation of the taxable profit allocated to the Irish branches of two Apple group companies, she said. The Commission's inquiry relates to the Irish branches of two Apple entities - Apple Sales International (ASI) and Apple Operations Europe. It focuses on two so-called tax rulings offered to the company by Ireland in 1991 and 2007, clarifying how the company's corporate tax rate would be calculated.

The Commission argues that Ireland's tax dealings with Apple, through the two rulings, broke the "arm's length principle" espoused by the Organisation for Economic Cooperation and Development (OECD).

In essence, Brussels has accused Ireland of striking a tax arrangement with Apple that was based on the desire to keep jobs here but which gave the company an advantage that amounted to state aid and was contrary to international guidelines. The Apple case is one of a number being pursued by European Competition Commissioner Margrethe Vestager, pictured, where the alleged breach of Europe's state aid rules has been used to allow Brussels make unprecedented moves into national tax policy.

The fresh round of information requests means the Apple tax case will not be a live issue during the spring election.

A mid-campaign finding against Ireland would have been a major blow for the Government, which has repeatedly insisted it has no case to answer.

The European Commission published a 21-page technical document last year setting out the case for its formal investigation into the State's tax arrangements with the firm.

Ireland and Apple both insist there is no case to answer.

Meanwhile, Moody's is the latest to criticise the Coalition's failure to use unexpected tax gains to pay off debt.

Ireland's debt rating would probably be upgraded to "A" status if the debt-to-GDP ratio was cut faster, Moody's said.

In a new credit report Moody's said evidence of the authorities' strong commitment to a strong pace of fiscal consolidation would also be positive for the rating".

Irish Independent

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