- Appeal important for Ireland’s international reputation
- Integrity of Irish tax system must be defended
- Minister Flanagan highlights important role of European Courts
- Tax certainty essential for investors
- Ireland remains a committed member of the EU
The Minister for Foreign Affairs and Trade Charles Flanagan TD this evening Wednesday 07 September addressed the Dáil Debate on the Apple State Aid case.
A Cheann Comhairle,
I am pleased to have an opportunity to speak on this important motion for two reasons. First, I consider it essential that the Irish Government appeals to the Courts regarding the Commission’s analysis and secondly, because I believe it is very important that we set out clearly to the Irish people why we wish to do so.
As Minister for Foreign Affairs and Trade, I am particularly conscious of the need to protect our international reputation. Appealing to a Court to determine the legal validity of Commissioner Vestager’s conclusions is a necessary step to defend the integrity of our tax system and indeed tax systems across the European Union. With my Trade hat on and speaking as Chair of the Export Trade Council, I can say that it is also crucial to provide tax certainty to business.
I am a passionate supporter of the European Union project and I believe part of its great strength is that it is clearly governed by the rule of law. In this instance, I believe that the Commission is encroaching into the area of taxation which is a sovereign competence and I believe that the European Courts will support that view.
Our own taxation system is founded on the strict application of the law, as enacted by the Oireachtas, without exception. The Irish Revenue Commissioners – whose integrity is widely admired - collected the full amount of tax due from Apple in accordance with Irish law. Ireland did not give favourable tax treatment to Apple. No State aid was provided. These are the simple facts.
I welcome the Commission’s explicit statement that its decision “does not call into question Ireland's general tax system or its corporate tax rate”. While this has been little reported on, it is an important statement.
A Cheann Comhairle,
No one can dispute that that the international tax system is in need of improvement. I commend Minister Noonan for his leadership in this area in his tenure as Finance Minister.
Ireland has been actively addressing aggressive tax planning both domestically and in multilateral fora. In 2014 and 2015 Minister Noonan enacted changes to our corporate tax residence rules to combat stateless companies to end the so-called “Double-Irish tax” structure. The reforms introduced are little commented on but they are very important.
Speaking as Minister for Foreign Affairs and Trade, I am acutely conscious that while there is some space for domestic action, the problems in the international tax system are most effectively addressed in multilateral fora. Ireland, alone, cannot solve the difficulties in global taxation practice. We continue to play an active and progressive role in global work to reform the international corporate tax system most importantly through the OECD Base Erosion and Profit Shifting (BEPS) agenda.
Ireland has actively sought to implement BEPS through measures such as country by country reporting. The Knowledge Development Box was the World’s first such tax measure to comply with the OECD’s tough new standards. At EU level, Ireland agreed the Anti-Tax Avoidance Directive in June with other EU Member States.
The international community needs to work together to tackle the problems with the international tax system. Therefore this is a time when the EU should be seeking to work more closely with the United States, rather than clashing with them.
The approach to State Aids proposed by the Commission is a recipe for uncertainty and confusion. Taxpayers in EU member states are entitled to rely on the law of those States. Governments cannot prudently manage their finances where tax receipts can be subject to retrospective and unforeseeable changes on foot of very broad application of State Aids rules. This need for fairness and for certainty have been critical factors in the Government’s appeal of the Commission decision. The analysis presented by the Commission sits very uneasily with the overall Commission demand for responsible fiscal management by the Member States.
A Cheann Comhairle,
Investors take decisions on the basis of predictability. Uncertainty militates against investment and job creation.
In the context of Brexit and other economic headwinds, this is a time to underpin the resilience of the Irish economy in the coming years.
A Cheann Comhairle,
To conclude, it would be totally wrong to see the Government’s decision to appeal the Commission’s findings as a turning away from the European Union. On the contrary, we are turning to the EU’s courts to support our view on the correct demarcation between taxation and state aid under the law.
While we disagree with the Commission’s decision it is important to underline that Ireland is a committed member of the EU. Our appeal is in defence of the European Union acting in a fair and predictable manner. This in not only in Ireland’s interest but in the interest of the European Union and all of its Member States.
In doing so, we are taking urgently required remedial action in defence of and in support of our reputation, our economy and of wider business confidence.