MNCs must pay their fair share of corporation tax

15 July 2020
  • Labour has called for a minimum effective rate of corporation tax to be introduced.

Speaking in response to the General Court of the European Union (GCEU) annulment of the Commission’s tax ruling against Apple, Labour Finance spokesperson Ged Nash TD, said that now is the time for new rules to ensure all multinational corporations pay their fair share of tax in future.

Deputy Nash said:

“The General Court of the European Union has effectively ruled that Commissioner Vestager overreached when she ruled against Apple and Ireland. She failed to prove Ireland granted selective treatment or unfair state aid in relation to the tax rules that existed at the time.

“This is not to say the previous tax rules were satisfactory. In fact, since 2014, Ireland has closed the loophole that Apple and other corporations used to minimise the amount of tax they paid here or anywhere.

“While the Commission may appeal the judgement, the real issue now is for European governments to agree a decisive step forward to reform the global system for taxing multinationals, especially those in the digital sector that can simply choose where in the world to locate their profit-making intellectual property rights.

Deputy Nash continued:

“For too long our industrial strategy has over-relied on our 12.5% corporation tax rate alongside flexible rules that allow corporations to minimise their taxes. This is dangerously unsustainable as we now rely on multinationals for over two-thirds of our corporation tax take as well as a significant amount of other taxes.

“Regardless of today’s Apple Tax verdict, it is clear these days are numbered. We have already committed to the OECD BEPS programme against international tax evasion which could lower our annual tax revenue by €2-3.5 billion according to IFAC. And the European Commission is now planning an aggressive crackdown on low-tax member state’s such as Ireland via Article 116 of the EU Treaty, which can’t be vetoed.

“From Labour’s perspective, the fact that Apple paid 0.005% in corporation tax while most small companies paid the full 12.5% rate was wrong. Recent reforms need to go further to make our tax system genuinely fair.

“Labour has called for a minimum effective rate of corporation tax to be introduced, and now is the time for the Government to do this as part of a reorientation of Ireland’s economic model in the wake of COVID-19.”

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