Ireland back in spotlight over Apple tax deal

The prospect of the EU accusing Apple of getting illegal tax breaks in Ireland has reopened a debate on how European countries attract multinational businesses and puts Dublin back in the spotlight.
The US tech giant, which has had its European base in Ireland since 1980, may have to repay billions of dollars if Brussels rules that its sweetheart tax arrangements with the Irish government are a form of illegal state aid.
The European Commission said it would release on Tuesday the formal reasons behind its June decision to launch an official inquiry into the deals negotiated by the iconic maker of iPhones and iPads.
Apple and other giants including Amazon have come under intense pressure from politicians and campaigners over their tax dealings, with critics saying the arrangements allow companies to move billions in earnings from higher taxed countries to lower taxed ones.
"74 billion profit and no taxes paid. Apple playing tricks with subsidiary in Ireland. EU, this must be severely punished!" tweeted Sven Giegold, a Green member of the European Parliament from Germany.
The Apple case will be keenly watched in several European capitals.
An inquiry into Italian automaker Fiat's tax deals with Luxembourg was also launched in June, with the reasons behind that decision also due to be released by the European Union on Tuesday.
Starbucks meanwhile is the subject of a probe into its tax arrangements with the Netherlands, although the EU's report on that will not come until later.
- Ireland in tax spotlight -
But the most pressing questions are about Ireland, which has attracted a string of tech and pharmaceutical multinationals to the emerald isle over the years with its very low corporation tax and other favourable terms.
The Financial Times said that Apple had paid just 2.0 percent tax in Ireland since 1991, far below Dublin's unusually low corporation tax rate of 12.5 percent, which has itself drawn criticism from other EU nations.
Any move by Brussels to curb that could have a negative effect on Ireland, where the economy is only just emerging from a huge financial crash, years of recession and a 85-billion-euro EU-IMF bailout.
Ireland's economy is currently the exception in a largely stagnant eurozone, growing 1.5 percent in the second quarter of 2014 compared with the first three months of the year which saw growth of 2.7 percent.
"I think it is damaging from a reputational aspect. But also it creates uncertainty and what multinational companies and other big investors, what they don't want is uncertainty," tax expert Jim Stewart of Trinity College Dublin told Ireland's RTE radio about the Apple case.
"So if this comes under attack, then the question is, will these companies continue to operate here?
"It just creates a little bit of uncertainty; now I think most of them will continue to operate, but it will affect their operations, the size of their employment and other issues."
Stewart said Ireland should seek a less "tax-driven industrial policy" and look more towards trying to attract high-paying, big-employing firms that build solid foundations in Ireland.
Major companies including Facebook, PayPal, Twitter and Amazon already use Ireland as a European base.
While there is no chance of EU states harmonising their tax, since any such move requires unanimity that Dublin would withold, it could be the bloc's rules on illegal state aid which could do most to rein in the practice.