Former IMF director warns Ireland against "full frontal assault" over Apple ruling

Donal O'Donovan says the country needs EU support in other matters

Former IMF director warns Ireland against "full frontal assault" over Apple ruling

The International Monetary Fund headquarters is seen in Washington in 2010 | Image: Cliff Owen / AP/Press Association Images

A former deputy director of the International Monetary Fund (IMF) has warned Ireland against alienating Europe over the Apple tax ruling.

The EU Commission says the tech giant owes Ireland up to €19bn in back taxes, plus interest, in relation to its profits.

Commissioner Margrethe Vestager, in charge of competition policy, said yesterday: "Member states cannot give tax benefits to selected companies – this is illegal under EU state aid rules.

"The Commission's investigation concluded that Ireland granted illegal tax benefits to Apple, which enabled it to pay substantially less tax than other businesses over many years.

"In fact, this selective treatment allowed Apple to pay an effective corporate tax rate of 1% on its European profits in 2003 down to 0.005% in 2014."

The Cabinet is meeting to discuss what the next step should be.

Both the Government and Apple have said they plan to appeal. However divisions have emerged with some ministers over whether or not such an appeal should take place.

And Donal O'Donovan, former deputy director of the IMF, seems to agree.

"I really think that the Government should refrain from mounting a full frontal assault on this ruling and going full-blast after the Commission," he told Newstalk Lunchtime.

"The fact of the matter is that they (Ireland) lost and they lost big time - what reason do we have to think that this ruling would be reversed on appeal?

"There's a question of reputation - if we appeal this is going to drag on for several years...and I don't think that's good for Ireland.

"I haven't heard any European politician come out and say that they sided with the Irish. Now the fact is that we need support from our European friends on a number of things.

Just take one example: Brexit. We will be looking for European support looking for special arrangements relating to the particular position of Ireland; and to be able to get that we need to have friends, we need to have support - and I think an all-out assault on Europe and the European Commission at this stage would not be helpful at all."

'Be on the right side of history'

He also says the ruling brings up questions over how the Revenue Commissioners acted at the time of the agreement.

"Did they in fact at the time - either in '91 or '07 - actually explicitly go the the European Commission, the state aid people, and say 'Is this ruling OK (and) consistent with your principles?'

"If they did and if they got a positive answer then I think the Government's position is greatly strengthened.

"On the other hand, I suspect that they did not...and if that's the case then I think we are responsible for a mistake."

And Mr O'Donovan says things have changed in the last few years, resulting in more scrutiny.

"I do think we should be seen to be on the right side of history on this because there's no doubt about it in the last five years - we've seen it throughout the world - there's a somewhat populist, political uprising against these multinationals that don't pay tax anywhere.

"I think we shouldn't be seen as somehow dragging our feet and being reluctantly pulled along to try and do something about this.

"We should be up there out in front and leading the way, and we haven't been over the years."