Is the Apple tax decision a reason to stay in Europe or leave?
The European Court has finally concluded that Apple was in receipt of state aid thanks to a series of sweetheart deals struck with the Irish tax authorities.
The consequence is almost farcical, in that Ireland is being offered billions of euros in back taxes that it doesn’t seem to want.
We should be able to help here. If Ireland doesn’t want those billions, then my guess is that Theresa May, Philip Hammond and I can all find good uses for them.
The underlying story goes far wider than the manufacturers of everybody’s favourite mobile phones and other overpriced gadgets, with dozens of other household names operating on a similar basis from unlikely headquarters in low tax jurisdictions.
In simple language, Apple set itself up in Ireland to avoid taxes in the United States, the United Kingdom and most other territories.
Is there anything wrong with doing this? The response to that question could lead to a moral, ethical or merely legislative debate. The strict answer though is a definitive “no”.
However, some of us might feel at the very least a little unhappy and in some cases deeply outraged by the fact that we are paying additional taxes because Apple and many other corporates choose to siphon their profits through low tax jurisdictions.
Strangely, while the man in the street will quite happily picket a well-known purveyor of sugary coffee, many accountants appear to regard aggressive tax avoidance as a source of pride in their industry rather than something a little sordid and potentially illegal. At some point, this will be a subject that I plan to consider in greater depth.
Mind you, if Britain ever finally manages to extricate itself from its European obligations, there has to be a reasonable possibility that we will become a tax haven along with some of our offshore dependencies. We could even end up on the OECD blacklist, which would be rather fun.
At that point, the likes of Apple might suddenly begin locating their head offices in the UK. The theory is good but I fear that in practice most well-established multinationals will be reluctant to relocate unless there is a strong reason for doing so.
In addition, if we really did take the step of flouting good tax practice in an attempt to buy business, the chances of doing any kind of trade deal with Europe would disappear overnight, which may or may not be a far greater loss than any gains that could be made through sweetheart deals.
In the short term, I will be interested to see whether any of the tax cases closed by Dave Hartnett and some of his predecessors come under EU scrutiny before we finally hand in our notice. With luck, the economy could be boosted by an unexpected windfall from this source.