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Ireland Confirms Apple Ruling Appeal, To Affirm CIT Rate

by Jason Gorringe, Tax-News.com, London

13 September 2016


Irish Finance Minister Michael Noonan has announced that the Government has agreed unanimously to challenge the European Commission's decision in the Apple state aid case.

Noonan said: "I believe that there are some very important principles at stake in this case and that 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. Ireland does not do deals with taxpayers."

Immediately following the announcement of the Commission's decision on August 30, the Irish Finance Department said that Noonan would seek Cabinet approval to appeal the ruling. In a statement, it argued that "it is not appropriate that EU state aid competition rules are being used in this new and unprecedented way in the area of taxation, which is a member state competence and a fundamental matter of sovereignty.

Following an in-depth state aid investigation launched in June 2014, the Commission concluded that two tax rulings issued by Ireland to Apple have substantially and artificially lowered the tax paid by Apple in Ireland since 1991. "This selective tax treatment of Apple in Ireland is illegal under EU state aid rules, because it gives Apple a significant advantage over other businesses that are subject to the same national taxation rules," it contended.

The Commission has ordered Ireland to recover "unpaid taxes" from Apple for the years 2003 to 2014 of up to EUR13bn (USD14.5bn), plus interest. Ireland has until November 12 to lodge an appeal. The Government will hold the recovery amount in escrow until the case has been concluded, as it may ultimately be returned to the company in the event of a successful appeal.

In an open letter to customers, Apple stated that the Commission is "effectively proposing to replace Irish tax laws with a view of what the Commission thinks the law should have been." It added that the company "never asked for, nor did we receive, any special deals."

Noonan also announced that the Government will propose a parliamentary motion in support of its appeal. The motion will affirm the Government's commitment to the 12.5 percent corporation tax rate, the research and development tax credit, and the knowledge development box. In addition, the Government will commission an independent review of the corporation tax code, which will however exclude any possibility of a change to the 12.5 percent corporation tax rate.

He said: "It is good practice to undertake periodic reviews of key areas of government policy. The last review of corporation tax policy took place in 2014. Since then a wide range of new international developments have emerged in international taxation, such as the Organisation for Economic Cooperation and Development base erosion and profit shifting project. We need to ensure that Ireland's corporation tax code meets these new standards while remaining competitive as the economy continues to grow."

TAGS: court | tax | business | European Commission | Ireland | interest | law | corporation tax | ministry of finance | tax authority | United States | standards | telecoms | European Union (EU) | research and development | Europe

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