With Microsoft and Google among US companies tied to Ireland, industry advocate raises concern over implications of European commissions decision
Americas biggest technology companies have been taking stock of the European commissions decision on Tuesday to order what it called recovery of illegal state aid for alleged unpaid taxes in Ireland from Apple of up to 13bn($14.6bn, 11bn), plus interest.
Apples surprise, retroactive tax bill which is believed to be the largest in history has raised both condemnation and alarm in the technology industry, particularly for companies with a long history of operations in Ireland.
According to Dean Garfield, president and CEO of the Information Technology Industry Council a Washington DC-based technology industry advocacy group that counts significant multinational Irish technology players Amazon, Apple, Dell, EMC, Facebook, Google, HP, Intel and Microsoft as members the key issue for them lies in the confusing and retroactive nature of yesterdays decision, which applies to tax arrangements from 2003 to 2014.
The commissions decision calls into question whether following the laws in an EU member state is a guarantee that you are playing by the rules in Europe, he said. We are deeply concerned by the commissions departure from established channels of multilateral cooperation on tax policy in favor of a unilateral approach that, by imposing unforeseeable and retroactive penalties, risks chilling transatlantic commerce and investment and growth in the EU at the expense of US taxpayers.
Garfield cited a white paper last week from the US treasury department which expressed concern about the European commissions approach to the issue. Even before yesterdays final number for the retroactive tax sought against Apple, the treasury department expressed concern about the European commissions general approach.
The Commission is seeking to recover amounts related to tax years prior to the announcement of this new approach in effect seeking retroactive recoveries, it stated. Because the Commissions approach departs from prior practice, it should not be applied retroactively.
The computing firm Dell has been a part of the Irish technology sector since 1990. Yesterdays move comes at an interesting time for the company, which just announced that it would be completing its much-anticipated merger with the storage maker EMC on 7 September following regulatory approval of the deal by Chinas ministry of commerce. It was granted a similar clearance by the European commission in February this year.
Both Dell and EMC have a significant presence in Ireland. Dell remained circumspect yesterday in its statement on the commissions decision.
While we are not going to comment on Apples situation, I can confirm that Dell has a strong history of paying corporate and other taxes in Ireland and collecting taxes such as employment tax and VAT, said the company in its statement. We understand our responsibility to be compliant with the tax laws of all of the countries in which we operate. This applies to both the letter and the intent of the law.
Microsoft did not respond to requests for comment on the Apple case, although the company has recently worked closely with the Irish government in championing privacy rights as part of an effort to fight a US court-ordered warrant concerning data held in a Microsoft European data centre in Dublin which the company won on appeal in July this year.
Intel also declined to comment directly on the Apple case, yet clearly has an interest in how American technology companies are treated by the European Union. Intel opened its Leixlip campus, located in County Kildare, in 1989 and also operates a communications facility in Shannon that works on developing connected car applications for the automotive industry and end-to-end solutions for the retail sector.
Facebook has faced well-publicized questions dating back a number of years about its UK corporate tax position. More recently, Facebook has gained attention from the US Internal Revenue Service (IRS) related to the companys operations in Ireland. It did not respond to requests for comment.
In a petition filed last month, the IRS said it was conducting an examination of the federal income tax liability of Facebook for the tax period ending 31 December 2010 and that details of its operations in Ireland were part of that examination.
Part of the IRSs examination concerns matters arising under certain agreements between Facebook Inc and Facebook Ireland Holdings Limited (Facebook Ireland) purporting to transfer rights associated with Facebooks worldwide business to Facebook Ireland, with the exception of the United States and Canada, the IRS stated in its petition on 6 July 2016.
Google also declined to comment for this story, but the company is already receiving attention from the European commission on another front: concerns about possible antitrust violations.
Last month, the European competition commissioner, Margrethe Vestager who is cementing her reputation as one of the toughest politicians in Europe talked about the commissions preliminary conclusion that Google has abused its dominant position by systematically favouring its comparison shopping service in its search result pages as part of a statement of objection to the web search giant.
Google has come up with many innovative products that have made a difference to our lives. But that doesnt give Google the right to deny other companies the chance to compete and innovate, she said in the statement.
Today, we have further strengthened our case that Google has unduly favoured its own comparison shopping service in its general search result pages. It means consumers may not see the most relevant results to their search queries. We have also raised concerns that Google has hindered competition by limiting the ability of its competitors to place search adverts on third party websites, which stifles consumer choice and innovation.
In a statement, Apples CEO, Tim Cook, said the commissions claim has no basis in fact or in law. We never asked for, nor did we receive, any special deals We are confident that the Commissions order will be reversed.