FDI to Ireland could be hit by adverse Apple tax decision
Foreign multinationals could reassess plans to invest in Ireland if the European Commission rules decisively against Apple in its multi-billion tax battle with Brussels, the chief investment officer of Merrion Stockbrokers has warned.
David Holohan said that while foreign companies are unlikely to row back on current foreign direct investment (FDI) projects they have planned for Ireland if the Commission makes Apple pay up to $19bn (€17.6bn) in back taxes, future plans could be compromised.
"Any capital expenditure going forward, if there was a change with regards to the current arrangements, would need to be factored in," said Mr Holohan.
"While the investments that are in the country at the moment are likely to remain in place, I think further investments would be put at risk if there was a significant change, because that would change their return calculations in the investment decision."
Apple boss Tim Cook has held talks with the head of the EU's Competition Commission, Margrethe Vestager, but neither side has commented as to whether or not those talks might have involved efforts to reach some sort of settlement.
The European Commission is probing Apple and other multinationals to determine whether or not they benefited from unfair and impermissible tax arrangements in countries including Ireland. A ruling on Apple is due within weeks.
Apple's own investment banker, JP Morgan, has predicted that the technology company could be forced by Brussels to hand over $19bn to Irish authorities in a worst-case scenario.
Mr Holohan said that Apple has a net cash pile of over $140bn (€129bn), so such a determination against it wouldn't have dire financial consequences for the firm.
"One of the attractions of Ireland is its tax regime," he said. "So, if there was a change to that, and one that could be retroactively applied, it would be a question-mark for potential investors to consider." The Government has continually insisted that neither it nor Apple has a case to answer in the European Commission's probe.
Taoiseach Enda Kenny reiterated that position this week at the World Economic Forum in Switzerland.
"As far as Ireland is concerned - and we've been very clear about this - we've dealt with all the issues about reputational damage, about comments that Ireland was some sort of tax haven which was completely without foundation and utterly untrue," he told Bloomberg TV.
"From our perspective we're very clear that our Revenue Commissioners have never done specific deals or a favourable deal with any particular company."
Europe is also investigating other firms including Amazon and Starbucks in relation to their tax arrangements in other European countries.
Tim Cook visited Ireland in November to highlight Apple's commitment to the country. Apple will add 1,000 jobs in Cork when an expansion there is complete, bringing the total to 6,000.
The US giant will also build a huge data centre in Athenry, Co Galway.