iTax update

It seems the European Commission are continuing to ask fresh questions of Ireland on the Apple State Aid case with Commissioner Vestager telling a European Parliament committee yesterday that she did not know when the case would be ready for a decision.

The Financial Times have devoted an article in their ‘The Big Read’ series to the case. See here.

7 replies on “iTax update”

The US corporate tax system was last reformed in 1986. The system is a mess and the US is not only the host of the biggest tax haven, setting up a shell company is easy there.

Nevertheless, the US forced the Swiss in 2009 to breach bank secrecy that was established by a 1934 Act, which has been a huge development.

The US system of justice can be both wacky, inconsistent and abusive of human rights. Just watch John Oliver, the excellent British comic, on civil forfeiture:

Dan O’Brien seems to be suggesting that Ireland shouldn’t contest the European Commission’s decision should it find that Apple had received some sort of preferential treatment – and accept what ever dosh might have to be repaid:

I have my doubts about this. The legal system in Ireland allowed Apple to establish companies that could generate stateless or “ocean” revenue that was not subject to taxation in any jurisdiction. I suspect this is what helped to reduce Apple’s effecive tax rate rate in Ireland to this contended and alleged 2%. This loophole has now been closed. Assuming we will have a government capable of mounting an appeal should the Commision decide against Ireland and Apple there should be strong grounds that Apple simply exploited a loophole in the law, but did not not do anything illegal. And equally strong grounds that there was no special treatment of Apple.

There were many of us who strongly believed that Ireland’s approach to the taxation of MNCs – both explicit and implict – was reprehensible – and that it would come out in the wash eventually and cause damage. But technically it appears that nothing illegal was done – even if the legal system, public policy and enforcement were deficient. Governments everywhere have a long track record of defending things that are reprehensible, that should not have been allowed and that should have been remedied by amendment of relevant legal provisions, but which were not illegal at the time. Successive Irish governments have proved to be particularly cunning and inventive in this respect. Appealing any Commission decision in this instance should be a doddle for whatever governing politicians emerge from the current impasse and for the cunning, clever, jesuitically-minded mandarins who advise them.

But the problem always comes back to the mind-numbing stupidity of the US Federal Government (ably assisted by default by a polarised and ineffectual legislative branch) in maintaining one of the highest corporate profit tax rates among developed economies and in seeking to enforce it beyond its geographical jurisdiction.

@ PH

To quote the article; ” the outgoing government’s stated position (that it will take a legal challenge) is certainly logical. It would be very hard for the Irish state to strongly protest its innocence, as it has done consistently, and at the same time say that it would not take every measure possible to prove its innocence.”

Not to mention the fact that Apple is also fully entitled to defend its position legally.

It will be an interesting issue for the incoming government, one way or the other, whatever the make-up of the latter is to be, the one certainty being that it will be a ramshackle affair because, as a Sinn Féin representative put it, FF wish to be in opposition and government at the same time. He opined that it would not work, a view shared by many.

The Irish body politic, if a minority government is to survive any length of time, will have to compress changes in practice – political, legislative and administrative – into a matter of weeks which took the Swedes decades to achieve.


Even then, the approach came unstuck in 2014, resulting in a major crisis, with the threat of an election, when the right-wing Swedish Democrats party took the process hostage or, rather, the defeated conservative government was unwilling to play ball with the incoming socialist minority administration in agreeing a budget. Seem familiar?

The most likely cause of failure, however, is that Ireland lacks what the public servants in Sweden had succeeded in putting into place over the years i.e. a highly sophisticated computerised, centralised, budgetary formulation and control system.

The one feature that is different from the Swedish experience, and which may save the day, is the fact that the country’s membership of the euro already provides the necessary basic legal framework. It may buy the necessary time.

It’s important to understand how Apple works .
My copy of the billionaires issue of Forbes states that Lauren Powell Jobs has a net worth of 16.7bn
She doesn’t need tax love from Ireland. Parasitical capitalism is going to collapse anyway


Having expended so much time and effort DG COMP will have to make some sort of finding against Apple and Ireland. But most of these high profile investigations and subsequent decisions by DG COMP are mediated by which direction the political wind is blowing. For example, the decision to extend the investigation made at the end of last year was intended to prevent a decision being issued prior to the general election – and to avoid discombobulating Mr. Kenny, one of Chancellor Merkel’s favoured centre-right sycophants. In any event, whatever decision will emerge will get lost in the long grass of the appeals process of the CJEU.

As for the process of forming a government, the penny does not seem to have fully dropped for all the temporarily elected denizens of Leinster House that a plurality of voters have decided that the long-standing 2 and half party system no longer works for them. It took these voters a long time to reach this well-evidenced and fully justified conclusion, but now that they have reached this conclusion the two previously dominant, but now much shrunken, mainstream parties must deal with it. FF has no need to worry about SF becoming the dominant opposition force. In this and the last election the voters have sorted out FF and FG (and the Greens and Labour). There is every likelihood they will sort out what opposition they consider appropriate at the next election.

Finally, I fear you are more and more beginning to resemble the deluded left-wingers who continually lament that Irish voters are not more like the Scandinavians. Irish citizens will come eventually to their own settlement. They are currently transforming an almost century-old political settlement. In their own time they will transform the current economic settlement. And the transformation will parallel the transformation of the economic settlement that is beginning to take place in most of the advanced economies. The release of the Panama Papers has increased the speed of the winds of change.

@ PH

As I have pointed out before, I have no illusions with regard to a sudden conversion of either politicians or electorate to Scandinavian perceived virtues. What I am drawing attention to, repeatedly as the situation develops, is a coincidence of circumstances that is pushing towards the adoption by the politicians of certain budgetary practices which parallel those in Scandinavia and, hopefully, also towards acceptance of this by the electorate.

In fact, the budgetary practices in the various Scandinavian countries vary considerably. What unites them is (i) an organised, largely via broad trade union representation, consensus on funding equitably certain basic societal needs and (ii) agreed, and observed, expenditure ceilings. The Swedish model is by far the most successful because it also allows for effective macro-economic management. It has, indeed, it would seem to me, provided the template for the European Semester (the latter, however, suffering greatly from the process of negotiation that designed it).

Leaving aside the ultimate sanction of another election, the options of a minority or partnership government will BOTH require a shift to the European Semester/Swedish approach if there is to be a period of stable government. The sine qua non, however, must be that the expenditure ceilings are actually observed.

On your other points, and the core subject of this thread, exchanges between states, short of open warfare (which is also, nominally at least, subject to certain rules), is a mixture of politics and law. Bashing the participants does not advance matters much.

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