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Ireland to join Apple in fight against EU tax ruling

The Independent Alliance, a group of five lawmakers, fell in line after the coalition agreed to conduct a review of what tax multinationals pay and what should they pay.

Transport Minister Shane Ross, an Alliance member, defended Apple up to a point. “I think they were acting legally. What they were doing was making use of extraordinary loopholes that existed there,” he told reporters. “Multinationals provide absolutely vital jobs to the economy … (but) multinationals should pay a fair rate of tax in Ireland.”

A failure of the Alliance to come on board would have cast doubt on the government’s survival prospects. Dublin has just over two months to lodge an appeal to the EU’s General Court. If that fails, Dublin has said it plans to take the case to the European Court of Justice.

The issue goes to parliament on Wednesday next week, when lawmakers will be recalled from their summer break. The main opposition party, Fianna Fail, also favors challenging Brussels, so the government should easily win the Dail’s backing to fight what is by far the largest anti-competition measure imposed on a company by the EU.

Some Irish voters are astounded that the government might turn down the money, and the left-wing Sinn Fein party has led attacks from the opposition.

Apple was found to be holding over USD 181 billion in accumulated profits offshore, more than any US company, in a study published last year by two left-leaning nonprofit groups, a policy critics say is designed to avoid paying U.S taxes.

But Apple chief executive Tim Cook has said part of the company’s 2014 tax bill would be paid next year when the company repatriates offshore profits to the United States.

Obama to take the lead

The US government is keen to ensure that it, and not Ireland, gets the revenue.

White House spokesman Josh Earnest said leaders of the G-20 developed and emerging economies would tackle the wider issue when they meet in the Chinese city of Hangzhou on Sept. 4-5.

“The president will … lead the discussion at the G-20 about combating tax avoidance strategies that are implemented by some multinational corporations,” Earnest said.

“We need to find a way to make the global system of taxation more fair – more fair to countries around the world, particularly countries like the United States.”

A number of G-20 governments are worried about how multinationals move profits around so they end up getting taxed in a country that has very low corporate rates.

Last year the Organisation for Economic Co Operation and Development unveiled new measures to tackle corporate tax avoidance. A number of countries have moved to implement some of them measures, but the United States has not.

It needs to change its own tax rules which, for example, allow companies to build up tax-free profits offshore. However, Congress has struggled for years to agree such reforms.