The Government’s effort to downplay the European Court of Justice’s (ECJ) verdict in the Apple tax situation as history seems inadequate. Although some elements of the case from the past might be less relevant due to the evolving tax world and modified regulations, the ruling that Ireland unlawfully overstepped State aid guidelines is noteworthy and discrediting, negatively affecting Ireland’s standing.
Ireland’s corporate taxation strategies have faced scrutiny for a long time, even when the crux of the matter has been sometimes overshadowed. The focus lies on intricate tax guidelines and past tax practices, notably the out-of-date double Irish strategy.
Over the recent years, changes have been made to Ireland’s tax regulations, which have aligned with international accords. Ireland’s affiliation with the new OECD corporate tax pact serves as some shielding against rebuke. However, being found guilty of providing illegal State aid has severe implications, irrespective of the fact it was years ago.
In 2016, the Government appealed against the initial ruling on the premise of maintaining the reputation of Ireland’s corporate tax procedures. Even with modified tax regulations, it rekindles global interest on Ireland, and now concerns are raised on the amount collected domestically.
The initial phase of international corporate tax reform has significantly profited Ireland creating a hefty influx to the treasury, but also making Ireland susceptible to the actions and decisions of major corporations. Changes in tax regulations notably in the US, which encourages overseas investment, plays a crucial role in the narrative of tax evasion.
The conversation on the allocation of the €13 billion-plus interest, with a total of €14 billion in the escrow account, a significant monetary amount, will commence soon. It’s a discussion the Government would prefer not having, especially with an upcoming budget and general election where hopes are high and its inadequacies, particularly in housing, will be highlighted.
It’s not appropriate to allocate these one-time funds for ordinary, everyday expenses. There are numerous areas where these funds could be significantly beneficial such as housing, power supply networks, water services, educational establishments, and healthcare facilities. However, the primary issue at hand is not a lack of funds but the capacity to construct what’s required, while adhering to budgets and timelines.
Clearly taken by surprise by the ECJ’s ruling, the government is contemplating its next move. The available funds here are substantial enough to support crucial state investments in the upcoming years. Nevertheless, critical bottlenecks in implementation must also be tackled to ensure Ireland achieves value for money.