It was appropriate that the Dáil debated the issue of whether Ireland should appeal the European Commission's Apple tax ruling. Apple will appeal the decision anyway – and, to that extent, a long drawn-out process is now inevitable. However Ireland's position is also significant.
The Government is correct to appeal. The European Commission’s decision has all the signs of being politically-driven. It may or may not stand up to scrutiny in the European courts. Either way, clarity – though it may be long delayed – is important. And it is also vital that Ireland sets down a marker in relation to tax sovereignty.
That said, much of what came from the Opposition benches yesterday was valid. The Government was unprepared for the commission’s ruling – or at least the scale of it. Its initial response was slow. A long road lies ahead, not only in fighting the Apple ruling but also in dealing with its wider implications and with the linked issue of international moves to combat largescale tax avoidance by multinational companies.
Put simply, the Government needs to up its game. Endless repetition of the mantra that we have a transparent system and will defend the 12.5 per cent tax rate will not cut it. What is needed is a sophisticated and thought-through strategy which recognises the changing parameters of the international tax debate. There are dangers here for Ireland and there may be opportunities too.
Some of the criticism in the Dáil of the tax regime which allowed Apple to do what it did are also legitimate. The double Irish structure was a deliberate device which helped multinationals to legally avoid a lot of tax.
Of course the root of this lies in the US tax system. And, of course, Ireland was in competition for years with other countries to attract foreign direct investment – and tax reliefs were part of the package offered by many. But our tax laws left us vulnerable to criticism; the decision to abolish the double Irish in 2014 was overdue and the six year phasing out period is too long.
A long hard look must now be taken at other tax breaks. Successive governments have listened too carefully to industry lobbyists and members of the legal and accountancy profession and lobbyists. Too often, reliefs introduced for legitimate reasons have ended up being used for something else entirely.
In relation to the wider debate, Ireland’s position needs to be clear. We support the OECD-led drive to reform international corporate taxation. This carries with it the inevitable conclusion that , as the playing field is levelled. It is better to accept this and deal with the consequences to our best advantage, as the international political momentum for change is now probably unstoppable.