Wednesday 18 September 2019

John Mulligan: 'Political crap' or not, EU pursuit of Apple has huge implications

'If the tax rate was the only attraction, they would not be hiring thousands of workers here.' Photo: Niall Carson/PA Wire
'If the tax rate was the only attraction, they would not be hiring thousands of workers here.' Photo: Niall Carson/PA Wire
John Mulligan

John Mulligan

Apple boss Tim Cook described it as "political crap", but whatever the motivations behind the European Commission's pursuit of the tech giant, make no mistake - there are huge implications hinging in the outcome of the Government's and Apple's appeals against the €13bn bill from Brussels.

Not only does the August ruling by the Commission strike at the heart of the fabric of global commerce, it also arguably creates a beachhead for Eurocrats to pursue the Holy Grail of tax harmonisation across the EU.

There's no question that Ireland's low corporate tax rate has been instrumental in luring foreign investment. There's an argument frequently put forward by detractors outside the country that the rate is the primary - if not the sole - reason that foreign companies choose to establish bases here.

Other companies such as Google, Facebook, Twitter and Ebay have also opted to make Ireland their European home. They do it for the tax rate, but they do it for much more than that. If the tax rate was the only attraction, they would not be hiring thousands of workers here.

Just last month, Hungary announced it will cut its corporate tax rate to 9pc from next year - lower than Ireland's 12.5pc.

Latvia's corporate tax rate is 15pc. It's the same in Lithuania. Not a world away from Ireland's.

But those countries don't draw anywhere like the amount of foreign direct investment (FDI) Ireland does. Last year, Ireland received $5.5bn (€5.27bn) in FDI across 178 projects, according to FDI Intelligence. Latvia got $643m. Lithuania received $863m, according to Santander bank.

Investors are chasing more than just low tax rates. They are chasing talent, solid regulatory and legal regimes, closeness to markets, and capitalising on a critical mass of companies based in Ireland that has been decades in the making.

But all this must be done transparently. The Government insists Apple got no special deal. The European Commission thinks otherwise. It will be up to the courts to decide who's telling the truth.

The Government - and Apple - had to pursue an appeal against the EC's findings. Not to do so would have sent a message to Brussels that perhaps the Eurocrats were right all along, and to business that the Government will gleefully accept their investments, but then leave them hanging in the wind.

Irish Independent

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