Apple tax ruling hugely welcome despite flaws but Britain mustn't respond by playing Ireland's game after EU exit

Downing Street has said Apple is welcome to come across the Irish Sea, but Brexit Britain should be wary of trying to offer sweetheart deals to multinationals after it's out of the EU

James Moore
Tuesday 30 August 2016 17:34 BST
The appeal comes amid a debate over the amount of taxes paid by corporations
The appeal comes amid a debate over the amount of taxes paid by corporations (AP)

At last, a real and meaningful step has been taken to require a giant multinational corporation to pay its dues.

The €13bn (£11bn) demand for back taxes imposed on Apple by the European Commission is a stunner.

It is more than 40 times the previous record. Commissioner Margrethe Vestager, who looks after competition policy, said she wanted to send a “clear message” with the ruling and she’s surely done that.

Not before time, if the figures she produced showing that Apple had managed to get away with paying a tax rate of just 1 per cent on its European profits in 2003, falling to a pitiful 0.005 per cent in 2014, are even close to being correct. Apple, with just over $231bn (£177bn) stashed offshore to keep it out of the hands of the tax authorities in its US home, can comfortably afford to pay the gargantuan bill. And there will be an appeal that could mean it will be years before it is settled. Nonetheless, the corporate world will have no choice but to take note. Ms Vestager means business.

That said, there is high degree of perversity in the ruling. Sitting opposite Apple's executives when the deal was thrashed out was the Irish Government. A government which is being handsomely rewarded for its mendacity. A Government that is nonetheless going to appeal alongside Apple in an attempt to deprive itself of revenues that the Irish people could surely make good use of.

That government will be responsible for collecting the back taxes too; which is like a judge handing a burglar the keys to a holiday home, together with a fat bank account, after giving him twenty minutes on the naughty step as a sentence. You couldn't make it up.

But if a rather perverse ruling is what it takes to strike a meaningful blow against rampant corporate tax avoidance on behalf of the EU's restive citizens, then so be it. Multinational tax avoidance is a perverse game after all. Just look at the US, which has come out swinging for the “home team” despite America being one of the chief victims of Apple’s aggressive approach to tax planning, with that $231bn (£177bn) offshore cash pile sitting where Uncle Sam can't get it.

Which brings us to Brexit Britain, sitting in the middle as it seeks to shore up a faltering economy by becoming the world’s biggest offshore tax haven.

Is it any coincidence that the Government supporting Daily Telegraph reported Downing Street as saying the tech giant would be “welcome” to hop across the Irish Sea in the wake of the ruling?

It would be incredibly stupid for the UK to follow Ireland's lead, and to seek to thumb its nose at its European allies over tax after the invocation of Article 50 of the Lisbon Treaty (assuming that ever happens). Playing beggar thy neighbour with corporation is ultimately a zero sum game, as this decision has demonstrated. It is also deeply unfair to domestically based companies that pay their share. It enrages ordinary people who pay their shares.

Unfortunately, stupidity is not a commodity that has been in short supply in Britain of late. Otherwise we'd be staying in the EU.

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