One of the most hotly debated news stories in August was the European Commission’s decision that the so called ‘sweetheart tax deal’ between Apple and the Irish tax authorities was illegal. Following this decision the multinational was ordered to pay a sum of €13bn in back taxes. The EU’s decision prompted a huge debate, both online and in print, about the responsibilities that multinational corporations have to both the governments and the people of the countries in which they situate themselves.
The European Commission insisted that Apple’s tax deals with Ireland have ‘allowed Apple to pay substantially less tax than other businesses’. According to a European Commission press release issued on 30 August, the selective treatment Apple receives in Ireland gave them the opportunity “to pay an effective corporate tax rate of 1 per cent on its European profits in 2003 down to 0.005 per cent in 2014".
Tim Cook, chief executive of Apple, was vocal in his rejection of the European Commission’s findings calling it ‘political crap’. Like Cook, the Irish government spoke out against the ruling, announcing that they too would be appealing the decision.
The reaction on social media and in the press was markedly different than that of the cabinet. Tweets, statuses, articles and blogs poured onto the web from Irish citizens declaring injustice and demanding answers. One such voice was Fintan O’Toole, who asserted in the Irish Times that appealing the EU’s decision was as good as ‘hoisting the pirate flag’ and saying to the world that ‘Ireland has been operating as a tax haven’.
Criticisms of Apple’s tax practices were not confined to within the ROI. Writing in the Evening Standard, ex Deputy Prime Minister, Nick Clegg asked ‘if the big multinationals can minimise the tax they pay, who’s going to pay for the public services that their customers rely on?’; a question that could imaginably cause members of the Irish cabinet a great deal of discomfort.
Casting our minds back to April, few will fail to recall the leak of around 2.6 terabytes of data detailing the inner dealings of Panamanian Law Firm, Mossack Fonseca. Dubbed the Panama Papers, the enormous cache of information revealed how the wealthy from all over the world avoided paying tax through secret offshore accounts. Surely in this climate of distrust towards corporations, it is in the benefit of large companies to be transparent about the way they pay tax. Could being simply upfront save companies from the embarrassment and diminished image that comes with being caught in the act?
Whether we see the European Commission’s decision as a heavy-handed impediment upon Irish sovereignty, or as indicative of a positive stance against tax avoidance, working towards a culture of transparency would surely reduce risk of future disputes such as this. Something which I doubt anyone involved would object to.