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By | Kieren McCarthy 2nd September 2016 17:51

When Irish eyes are filing: Ireland to appeal Europe's $15bn Apple tax claw-back

Get your hand out of the Cooky jar, says Cabinet

The Irish government formally decided to appeal the European Commission's $14.5 billion back-tax demand on Friday.

"There are some very important principles at stake in this case," said the country's finance minister Michael Noonan. "A robust legal challenge before the courts is essential to defend Ireland's interests."

"The full amount of tax was paid in this case and no state aid was provided. Ireland did not give favorable tax treatment to Apple," he added.

The cabinet decision was unanimous, Noonan said, but the issue itself has sparked a heated discussion among politicians. Deputy leader of opposition party Sinn Fein, Mary Lou McDonald, said the decision to allow Apple to pay such little tax "demonstrates an absolute disregard and disdain for citizens, fair play and tax justice."

Parliament will be reconvened next week for a special session to debate the matter.

The EC, for its part, has said it will defend its ruling in court. Competition commissioner Margrethe Vestager said on Friday: "All of us benefit when businesses pay their fair share of tax. It's not in the interest of the individuals and businesses who do pay tax, if others aren't paying their share."

Good deal

Earlier this week, the EC determined that a tax arrangement between the electronic giant and Irish tax authorities – which saw Apple move the bulk of its profits to a company that existed only on paper – amounted to illegal state aid.

The two-year investigation claimed that Apple had paid a tax rate of just 0.005 per cent in 2014, and calculated that the company owed €13bn ($14.5bn) in back taxes. Both Apple and the Irish tax authorities strongly disputed the claim, arguing that there were no special circumstances and that Apple had paid the full amount of tax owed.

While the Irish establishment stands by its arrangement, politicians and citizens are less enamored with the arrangement, particularly since the Irish government has imposed tight spending restrictions for nearly a decade following the financial crisis. The huge amount owed has drawn a wide range of comparisons with the money spent on other government services, such as its national health service.

Ireland already has one of Europe's lowest corporate tax rates – 12.5 per cent – leading many large US corporations to set up their European headquarters in the country. Apple has stored a significant proportion of its revenue and profits in the country as a way of avoiding what it says would be an effective 40 per cent tax rate if it brought it back into the United States.

Apple has been pushing the US government for some time to lower that rate in order for it to "repatriate" the hundreds of billions it holds outside the country; although earlier this week CEO Tim Cook said during an interview about the EC tax demand that he would start bringing some of it back into the country. A spokesperson later "clarified" that he was assuming that the US government would lower its rate later this year. ®

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