The cabinet of the leadership of the Irish Government has agreed to appeal the European Commission’s ruling that Apple owes €13bn in back taxes. This aligns the Irish State firmly alongside Apple, which is also appealing the decision in the European courts.
Earlier this week, European Commissioner for Competition Margrethe Vestager dropped a bombshell ruling that took Apple and the Irish State completely by surprise.
According to reports, Irish leaders are understood to have been allowed to believe that the ruling would be made later in the autumn, following the State’s budget. They were also encouraged to believe that the final ruling would amount to around €1bn.
The State and Apple have two months to begin an appeal process in the European courts. The €13bn will be held in an escrow account for the duration of the appeal, which could last for six to seven years.
At stake is Ireland’s future industrial policy, its 12.5pc corporate tax rate and its sovereignty in terms of its ability to decide its own tax laws.
Apple CEO Tim Cook angrily dismissed the EU ruling as “political crap” and said that it was part of an overarching strategy to ultimately harmonise Europe’s tax rules.
Irish cabinet agrees to appeal Apple ruling
It is understood that, after a short meeting today, members of the Independent Alliance, and Independent TD Katherine Zappone, gave their approval for the appeal.
The news comes after days of uncertainty, during which the €13bn figure was allowed to dangle like a carrot for potential investment in capital spending, even though the European Commission also urged other countries to claim their share of the back taxes.
Both Apple and the Irish Government are likely to argue that they did not contravene state aid rules, that the taxes paid by Apple were in accordance with Irish laws and that the European Commission cannot simply retroactively impose taxes.
The memo brought before the emergency cabinet meeting was entitled “Tax Justice” by Finance Minister Michael Noonan TD, suggesting the tone and mindset with which he entered the meeting.
The cabinet has agreed to a review of Ireland’s corporation tax code by an independent expert.
It will transpose EU directives by the end of the year to ensure exchange of information on taxation and greater cooperation between countries.
The Irish Government also intends to take a lead on “tax justice” by hosting a high-level meeting before the end of the year, with international speakers and industry figures attending.
The Government has also committed to greater openness on tax rulings with a time limit of five years, as well as greater oversight for the Public Accounts Committee.
Rather than divide Irish leadership as it may have hoped, the European Commission is about to have a fight on its hands from an Irish Government that is now marching in step.