Business Irish

Thursday 23 March 2017

We have a chance to make a stand, and enhance the Irish brand

If Ireland was to take an exit route from the EU, would domestic business suffer? Peter Casey wonders if the example of Apple Inc might give us any clues

Peter Casey

Tim Cook, Apple Inc's chief executive, who leads a firm worth $560bn. Photo: Steve Humphreys
Tim Cook, Apple Inc's chief executive, who leads a firm worth $560bn. Photo: Steve Humphreys

Last month, Apple in the US refused to help the FBI unlock a terrorist phone on the basis that breaching privacy "threatens the security of our customers".

We Irish have a stake in this dispute. Partly, it is the same stake everyone in our intensively interconnected world has in the conflict between privacy and security, between individual rights and public safety. In fact, the case calls for the most thoughtful discussion and debate of the balance between privacy, security, personal rights, and collective safety.

But that's not the discussion I want to have just now.

Because our more particular and immediate Irish stake in Apple is founded in the fact that the world's biggest company employs 4,000 workers in its European headquarters in Cork - a quarter of its European workforce - and employs a further 2,500 "indirectly in the local area". By mid-2017, the Cork headquarters alone is slated to grow to 6,000 employees.

Now, personally, I do not know whether Apple's concern for its customers' privacy and individual security is as paramount and sacrosanct as it claims. What I do know to be an absolute certainty is that, for Apple, its brand is paramount and sacrosanct.

This is something I understand very well because, as a businessman, I feel exactly the same way about my own company's brand. More importantly, as an Irishman, it is how I feel about the brand of Ireland.

Clearly, Apple bought into our Irish brand when it established its European headquarters here. Any multinational company has to find us very attractive for at least five reasons: our low corporate taxes; our educated and motivated workforce; our democratic government; our geographical location ideal for trans-Atlantic business, and - well - the fact that Ireland is a country of great physical beauty and enormous cultural appeal.

In fact, with all Ireland has to offer, Apple would have been out of its mind not to headquarter here. Indeed, both they and we are very happy with the present arrangement - and we invite more multinationals to look, learn, and follow suit. Welcome to Ireland.

But now, the European Commission cometh.

Apple sets up subsidiaries in a variety of low-tax jurisdictions to avoid paying significantly higher US taxes. The US is understandably unhappy about this, but so are other European countries with relatively high corporate-tax rates. Under existing EU law, these countries have not been able to do much about it. Our tax rates are our affair.

Recently, however, the EU came up with a new angle. EU law forbids "state aid" to businesses in ways that "distort" market competition.

Accordingly, the EU is currently investigating whether Apple's tax deal with Ireland constitutes state aid. If so, Apple will be ordered to pay Ireland some $19bn - a decade's worth of taxes that the EU says it should have paid.

So who doesn't want a $19bn windfall? And why aren't we cheering? Because our brand is worth much, much more. If Apple is forced to pay us, our brand will suffer. Let's face it, of the five reasons I mentioned for moving a business to Ireland, the first - low corporate taxes - trumps the other four.

Right now, the audit of the Apple-Ireland tax situation is moving slowly. To those awaiting the results, European Commissioner for Competition Margrethe Vestager recently remarked: "Don't hold your breath. I'm just warning you."

So, I wonder, which will come first? The EU's decision about Apple or the UK's decision about Brexit?

For most small European countries, EU membership is a no-brainer. But, because of all five of the reasons I listed for doing business here, Ireland is not your typical small European country.

It is a very local place with a very compelling global orientation, in part due to its special relationship with a vast diaspora that has long permeated much of the world with Ireland.

The unique position of our "brand" requires us to have a free hand in trade with the world and the world's enterprises. Apple and other multinationals love our low taxes and everything else we have to offer.

Given a choice, these companies would surely prefer dealing with our straightforward government than engaging with the entire EU bureaucracy, attitude and regulatory infrastructure.

The Apple tax dispute is not a dispute between Apple and Ireland, but between Apple and the EU. We want Apple's business and all the other businesses Apple attracts to us. We therefore have an opportunity to make a stand with Apple, to show Apple loyalty, and to defend the Apple brand.

More important, in this dispute we have an opportunity and an obligation to enhance the Irish brand: as a nation that sincerely partners with the businesses its hosts, that burdens them with a minimum of regulation and red tape, and that enhances their value when they decide to call Ireland home.

How we tax those who do business in our nation and employ our citizens is a sovereign Irish matter, and any EU attempt to meddle in it should prompt our doing what the UK is doing, namely reconsidering its relation to the EU.

There is a very good chance that the UK will leave the EU. We urgently need to make sure that any terms and conditions given to Britain are extended to us. We have demonstrated in the past that we are not able to stand up to the German juggernaut and we were forced to pay the bondholders 100pc in the Euro.

Ireland has no reason to fear Brexit. It is, at the very least, our wake-up call, rousing us to make a sober and unblinking assessment of just what we get and just what we lose by continuing in a European Union that is increasingly dominated by a single member.

Peter Casey is founder and executive chairman of Claddagh Resources and is contesting the Seanad election on the Industrial and Commercial Panel

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