Noonan expects Apple tax inquiry to be dropped

in Brussels

Minister for Finance Michael Noonan has said he expects the European Commission investigation into Ireland’s tax deal with Apple to be dropped, as he defended Ireland’s corporate tax regime yesterday in the wake of the Luxembourg leaks scandal.

“My legal advice is that the Irish authorities will win the case quite legally and there isn’t a very strong case by the commission,” Mr Noonan said at the end of a two-day finance ministers’ meeting in Brussels that was overshadowed by the corporate tax avoidance expose.

Asked whether the Lux leaks scandal may increase the pressure on Ireland’s corporate tax regime and lead to further investigations against Ireland, Minister Noonan said that “it’s more likely that that investigation will be dropped than there will be further investigations.”

Noting that Apple had paid “everything in accordance with law on their profits in Ireland,” Mr Noonan said that corporate tax rates were a sovereign matter. “The setting of tax rates is a matter for sovereign governments under the Treaty,” he said.

His comments came as the European Commission’s new economics commissioner, Pierre Moscovici, pledged to prioritise taxation during his tenure as the EU’s top economics chief.

“For me it’s the priority, if not the essential priority of the next few years,” the former French finance minister said following his first EU finance ministers’ meeting as the EU’s new finance chief.

“I’m not just economics and financial affairs commissioner, I’m also the commissioner for taxation. This is a moment of sea change, of complete change in approach to tax. A new wind is blowing,” he said.

Economics portfolio

For the first time, taxation has been subsumed under the economics portfolio in the new European Commission, which is being led by Mr Moscovici.

France has traditionally been a critic of Ireland’s corporate tax regime.

Mr Moscovici said he aimed to “move forward” on a number of tax-related dossiers, to combat fraud and tax avoidance, and to consider tax harmonisation.

Revelations about tax rulings offered by Luxembourg during the premiership of Jean-Claude Juncker has prompted calls from a number of left-of-centre representatives of the European Parliament to reconsider a harmonised approach to tax.

Italian Finance Minister Pier Padoan said yesterday that Italy has been “for some time now” in favour of tax harmonisation.

Political momentum

But despite political momentum behind greater action to combat tax avoidance, the European Union’s most recent proposal to tackle corporate tax avoidance through EU law – the Common Consolidated Corporate Tax Base (CCCTB) – has stalled in the EU system.

Eleven out of 28 member states are proceeding with a Financial Transactions Tax (FTT) under a so-called enhanced cooperation procedure, which allows a core group of countries to adopt a tax measure, despite the fact that tax measures are generally decided by unanimity.

Mr Noonan said yesterday that such a system should not be taken as a precedent. “If there are to be other changes in tax law which will apply across the community they will have to be dealt with separately and fully discussed,” he said.

European Commission president Jean-Claude Juncker will represent the European Commission at next week’s G20 summit in Australia, at which ongoing measures to tackle corporate tax avoidance and Base Erosion Profit Shifting (BASE) will be discussed.