Ireland must address large-scale corporate tax avoidance despite Apple ruling

Today, Oxfam Ireland called on the Irish Government to urgently address continued and extreme corporate tax avoidance. Oxfam’s call is in response to the General Court of the European Union’s ruling this morning that the European Commission was incorrect in its decision that €13 billion in unpaid taxes by Apple constituted illegal state aid from the Irish government. The General Court ruling relates to an appeal by Apple and Ireland against a 2016 EU decision that required the US company to pay Ireland 13 billion euros in unpaid taxes.

Michael McCarthy Flynn, Oxfam Ireland’s Senior Policy and Research Coordinator said: “Despite this ruling there is no disputing the fact that Apple received significant tax reductions through tax rulings made by the Irish tax authorities.

“The Apple case highlights the extreme nature of corporate tax avoidance facilitated by Ireland, for which there is clear and growing evidence outside of the Apple case alone. A recent Oxfam review of the EU Tax Haven List showed that royalty payments sent out of Ireland amounted to more than are sent out of the rest of the EU combined, making Ireland the world’s number one royalties’ provider. High levels of these payments, far above normal economic activity, indicate that a jurisdiction is facilitating tax avoidance. In addition, the 2020 European Commission Semester Report on Ireland found that Ireland’s tax rules are used by companies ‘that engage in aggressive tax planning’.

“These repeated cases of tax avoidance point to the need for more fundamental tax reforms at EU and global level. These include a digital service tax, a minimum effective tax rate, effective measures against tax havens and new rules that require companies to disclose where they generate their profits and where they pay their taxes, for each country they operate in. This would give governments and civil society the ability to hold companies to account.

“In the wake of COVID-19 and the devastating economic fallout already being felt, governments must not continue to spurn the chance to raise vital revenue in corporate tax income for the benefit of their citizens. Corporate tax avoidance costs governments hundreds of billions of euros every year – money that could be used to deliver essential services, such as health and child care, which are even more critical in the wake of the global pandemic.

“The billions raised through corporate tax has the potential to benefit all citizens of Ireland at a time when need has never been greater, while clear and transparent tax systems would go someway towards restoring people’s frayed trust in a global tax system that favours large multinationals.”

ENDS

CONTACT:

For interviews or more information, contact:

Caroline Reid | caroline.reid@oxfam.org | +353 (0) 87 912 3165

Alice Dawson-Lyons | alice.dawsonlyons@oxfam.org | +353 (0) 83 198 1869

Notes to editors:

• The European Commission’s investigation into Apple’s tax deal with Ireland shows that, since the early 1990s, Apple has received significant tax reductions through tax rulings issued by the Irish tax authorities. According to the Commission, Apple’s subsidiaries in Ireland in some years paid as little as 0.005 percent of their annual profit in taxes. The Commission ruled in 2016 that Ireland had granted Apple an unfair advantage over other companies through its tax deals with two Apple subsidiaries, and it ordered Apple to pay 13 billion euro in so far unpaid taxes. Ireland and Apple challenged the decision in court.
• According to the European Commission, tax rulings may involve state aid within the meaning of EU rules if they are used to provide selective advantages to a specific company or group of companies. Tax rulings are used in particular to confirm transfer pricing arrangements. Transfer pricing refers to the prices charged for commercial transactions between various parts of the same group of companies, in particular prices set for goods sold or services provided by one subsidiary of a corporate group to another subsidiary of the same group. Transfer pricing influences the allocation of taxable profit between subsidiaries of a group located in different countries.
• Today (Wednesday 15 July 2020) the EU plans to launch a Action Plan for fair and simple taxation to support Europe’s strategy for the coronavirus recovery, a communication on tax good governance in the EU and beyond, and a proposal to revise EU rules on automatic exchange of tax information.