Time for Tax Justice: Apple must pay and the European Commission must go further

31 August 2016 - 10:30am
War on Want in the news

Vicki Hird is Campaigns and Policy Director at War on Want. This article was first carried by the Independent.

A sweetheart tax deal between technology giant Apple and the Irish government has turned sour. The deal, declared illegal by the European Commission, has deprived the public of £11bn in tax revenue.

The European Commission found Apple gained from a special tax arrangement its competitors could not use and so broke European state aid rules.

The company was able to siphon off up to two-thirds of its global profits through Irish-registered companies effectively paying as little as 1 per cent tax. By allowing Apple to pay such low corporate tax, Ireland has been complicit in tax dodging.

Apple must pay but it probably won’t. Perhaps another deal will be struck with the Irish government or their appeal will be upheld. Whatever the outcome these sweetheart deals are rotten to the core.

Meanwhile, Ireland's finance minister, Michael Noonan, talks of defending the ‘integrity of our tax system’

A ludicrous claim, in my opinion, since I am convinced that the integrity of the tax system has long since been perished. Its lifeless corpse receives a kicking every time the likes of Apple and government ministers such as Noonan shake on another ‘sweetheart’ deal.

For too long, multinationals aided and abetted by EU member states have robbed ordinary people of vital public services and given credence to crushing austerity programmes and the notion that there is there is no alternative.

Services like health and education are being run into the ground to prepare the scene for ever greater private sector involvement. The public continue to bear the brunt of cuts, falling wages and insecure work.

Yet until all multinational companies are forced to publicly report the profits they make and taxes they pay everywhere they operate tax dodgers will continue want their cake and eat it. 

The European Commission needs to stay firm and go further – to stop sweetheart deals anywhere, yes, but also to put an end to the insidious tax competition between EU member states.

We need new rules to ensure all multinational companies are required to publish key information about where they are doing business, earning their profits and paying their taxes – so called country-by-country reporting.

Despite the appearance of strong action today on Apple, so far the Commission hasn’t shown enough guts on its rules on reporting which should go hand in hand with tackling dodgy sweetheart deals.

The European Commission recently proposed a tax reporting system that will not stop multinationals dodging their taxes. Between 85-90 per cent of the world’s multinationals will not have to report under these plans.  The Commission offers no assurance that notorious tax havens such as British Virgin Islands, Switzerland, or Delaware in the US will be covered.

There is also a significant risk that Brexit will mean that the UK decides to take a ‘beggar thy neighbour ‘ approach similar to Ireland – allowing its tax regime to make sweetheart deals right left and centre with eager corporations undermining tax justice around the world; with the public left footing the bill.

It’s time for tax justice – we need transparency through country-by-country reporting and cooperation to end the tax competition which leads to a race to the bottom for everyone.

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