Apple, the world’s most valuable company, has reported record sales of popular products such as the iPhone before Christmas and a super-sized net profit of $34.6 billion (€31 billion) in the three months to December. These results come weeks after Apple, which has a large Cork operation, became the first global business to achieve a $3 trillion stock market capitalisation, albeit briefly.
The performance merits attention because Apple is widely perceived to be Ireland’s biggest single taxpayer, meaning it has a real bearing on the State’s finances. Apple of course is but one of an elite group of 10 international companies whose corporate tax payments are so large that they comprise more than half of all the corporate taxes that flow into the Exchequer. Such revenues have surged in the post-crash recovery, reaching a record €15.3 billion in 2021 after a relentless advance from €3.5 billion in 2011. The payments, now the third-largest source of Government income, were eclipsed only marginally in 2021 by the VAT yield. This is risky because corporation taxes are volatile – they can fall just as abruptly as they rise. The exposure is only magnified by the heavy concentration of income from a small number of very large corporate taxpayers.
These are key days in the business calendar as many public companies present quarterly and annual results to the market. It follows that financial reports from Apple and other major taxpayers will come under close scrutiny in Merrion Street. Statements thus far point to a continuation of the pandemic-fuelled boom in the tech sector, systemically important for Ireland. Still, it is not all one-way traffic. Software group Microsoft, another top-10 taxpayer, reported record sales and profits last week, its shares rising because of the positive outlook for its cloud computing unit. Shares in chip manufacturer Intel fell because of disappointment with its profit forecast. Results are due this week from two more tech giants with big Irish tax payments: Alphabet, the owner of Google; and Meta, owner of Facebook.
The pharmaceutical sector is similarly significant. Those making big payments here include Johnson & Johnson, which projected 2022 profits ahead of expectations and forecast improved prospects for a Covid-19 vaccine hit by uneven demand. Another is Pfizer, whose results next week will reflect sales of the blockbuster coronavirus vaccine it developed with BioNTech of Germany.
All of this flows from a successful inward investment policy that has made Ireland a global business hub. But if State interest and corporate performance were aligned when it came to job creation, the alignment is all the greater now because of tax. That renders the State vulnerable more than ever to the vicissitudes of trade in individual companies, their markets and the decisions they make.