Civil society and the members of the European Parliament generally welcomed the European Commission's decision to order Apple to repay €13 billion in tax that the American giant had managed to get round, due to tax agreements entered into with the Irish tax authorities.
Although a European source recently said that when it comes to taxation matters, you should "never waste a good scandal" (in reference to the fact that the 'LuxLeaks' affair and the Commission's State aid decisions set the legislative agenda at European level: Ed), the growing number of these tax rulings in the spotlight is not a sustainable situation, not for the Commission and not for taxation at global level, said Chas Roy-Chowdhury of ACCA, the association representing the accountancy profession.
"It will be extremely important to ensure that the OECD rules on profit splitting and the allocation of profits to permanent establishments are applied consistently by individual tax authorities, as well as by the EU", he added.
NGOs took the opportunity to repeat their calls to require public country-by-country declarations across the board, in which businesses would list profit made, number of employees, tax paid and other information in registers accessible to the public.
"We welcome the Apple ruling, but we can avoid relying on investigations if companies' financial information is public", tweeted the NGO Transparency International.
Public support for harmonising corporate tax base
Over at the European Parliament, Pervenche Berès (S&D, France) and Burkhard Balz (EPP, Germany) both expressed the view that creating a common consolidated corporate tax base (CCCTB) was the best solution. "We need to use this momentum to set up a comprehensive legal framework in Europe, based on a full, mandatory, corporate consolidated tax base in the EU, to ensure that profits are taxed where they are generated", Berès said. The CCCTB "is the only way to combat the problem at its roots", Balz added.
What makes the Apple case unique is the fact that the company arranged its activities in Europe in such a way that contractually, the clients were buying products from Apple Sales International in Ireland, not from the shops that physically sold them the products (EUROPE 11612). This means that Apple registered all its sales, and the profit that came from them, directly in Ireland. The Commission has now invited the other member states to check on whether the commercial risks, sales and other activities of Apple should have been registered on their territories and whether they need to require Apple to pay more tax on its profits over the period from 2003 to 2014 under their national taxation rules.
"It's is not just not just Irish citizens who lose out, but all European citizens, as the profits from all of the European countries have been redirected to Ireland without ever having been taxed in any other country", said Hugues Bayet (S&D, Belgium).
Irish MEP Matt Carthy (GUE/NGL) said that the Irish government should immediately rule out appealing against the Commission's verdict at the Court of Justice of the EU. On behalf of the NGO Oxfam, Aurore Chardonnet used similar reasoning. "Poverty in Europe has been rising and some countries have even had bailout programmes in recent years, so it makes no sense for European governments to spurn the chance to raise billions in corporate tax income for the benefit of their citizens", she said.
The Irish Prime Minister, Enda Kenny, indicated that the decision to appeal may not be made immediately. The Irish press has reported misgivings on the part of the partners of the coalition in government, the Independents. "It is important that colleagues would have the opportunity to have any anxieties or any questions raised that they want answered", Kenny said, quoted by the daily newspaper Irish Times.
Brian Hayes (EPP, Ireland) argues that appealing against the decision is above all a question of principle. "In my view, the EU Commission has overstepped its role and mandate (...). It's in Ireland's long-term interest that the government appeals this", he said.
British Socialist member Anneliese Dodds agreed that the matter raises a question of principle, but one of an entirely different nature. "All multinationals, regardless of the country of origin, must abide by EU competition law (…). The race to the bottom on tax must stop", she said. Like her German EPP colleague Markus Feber, she praised the Commission for not giving in to the recent intimidation attempts by the US authorities.
As for the Greens/EFA group, it is calling for an extension of the field of the fight against tax evasion and tax fraud. "The European Commission should broaden the spectrum of its investigation to a larger number of companies", said its president, Philippe Lamberts of Belgium. (Original version in French by Elodie Lamer)