Ireland is set to taste cold justice at the hands of the EU which has taken it to the European Court of Justice (ECJ) for failing to collect a year-old tax bill of a whopping 13 billion euros from American tech giant Apple.
Ireland is set to taste cold justice at the hands of the EU which has taken it to the European Court of Justice (ECJ) for failing to collect a year-old tax bill of a whopping 13 billion euros from American tech giant Apple. To be sure, the EU competition commission had deemed the Irish tax arrangements as state aid considering it left Apple with a considerably lighter tax burden than other competing companies that were subject to the tax laws elsewhere within the Union. The commission had ordered Ireland to collect the tax, a decision that had been immediately appealed by both Ireland and Apple. Margarethe Vestager, the European competition commissioner, also came down heavy on Luxembourg and Amazon for striking a deal that gave Amazon a significant tax advantage though the back taxes, as calculated by the EU, stand at a much lower figure than what Apple owes.
The EU is well within its rights to insist that member nations have tax frameworks that don’t put other members at a disadvantage. Globally, there is a move towards this, with the OECD’s Base Erosion and Profit Shifting (BEPS) framework becoming the gold standard in fighting tax avoidance by multinational. Where, the EU, has waded into murky waters is dragging a member-nation to court. All told, Ireland is a sovereign nation and, more important, it has appealed the competition commissioner’s order at the ECJ. Ireland , as its Parliament said in the wake of the European Commission referring it to the ECJ for non-recovery of tax due, it considers its tax arrangement a matter of national competence. It also made clear that, despite its stand, it was in the process of setting up an escrow account for the tax money to be deposited—collecting and managing the amount, it has admitted, poses an administrative and logistical challenge—adhering to EU rules in the process. By aggressively going after Ireland, especially in an atmosphere of deep popular distrust of the EU in several member nations and with the Brexit pain pending, seems unwarranted. The EU must crack down on tax avoidance and countries designing tax laws to become tax havens; but it can’t do so at the cost of being seen as infringing the rights of sovereign member-nations.