A heated debate has erupted between the Republic of Ireland and the European Commission after the latter revealed in an investigation that US tech giant Apple Inc. had abused it's status as a multinational corporation by booking its profits from European operations to its Irish based Apple Sales International company to unfairly benefit from the low tax rate charged by that country.
In concluding its investigation the European Commission ruled that Apple Inc underpaid $13.5 billion to the Irish ficus and ordered the California based tech company to pay the tax bill. Both the government of Ireland and Apple have expressed their intention to appeal the ruling.
Although a staggering amount, the implications of such a ruling relating to the taxation of large multinational corporations using countries like Ireland as a haven to pay less tax within its operations in the European Union could shift the playing fields in favour of fairness at the risk of a substantial divestment from these firms in the region.
The argument for enforcing the ruling has won over many individuals who feel the necessity in shifting the tax burden away from citizens and onto entities who have a far greater ability to generate incomes than the masses. This comes at a time when questions around the integrated sustainability of the European Union mounts with debt piles accumulating at alarming rates.
But some critics say the EU is playing a dangerous game in chasing companies for unpaid taxes for short term gains whilst forgetting the wider impacts that will affect the economic state of play in the long term.
In this case both the Irish government and Apple have stated the relationship between them has mutually benefited both parties by providing employment and economic value creation for Ireland as well as a gateway into European territories for Apple to sell its products.
But is it enough to accept gains in economic value generation in exchange for tax breaks?
If speaking in the context of Ireland as a country on its own, it could very well be prosperous but the fact of the matter is Ireland is one piece in an integral puzzle that all adds up to form a free market which we know as the European Union where countries adopt a common currency yet still have a considerable degree of control over their sovereignty.
Enacting a country's right to elect a tax regime means a level of discretion when setting an appropriate rate to charge those being taxed whether it be individuals or companies. This translates into many different tax rates charged throughout the European Union thus creating a competitiveness in attracting foreign investment to its shores.
Apple was fully in its right to take advantage of the tax rate offered to it by Ireland even if it says it hadn't negotiated special terms in paying over its fair share. Sovereignty hasn't been surrendered although Ireland needs to abide by the rules imposed on it by the EU to stay inside.
But how consistent are those rules?
If truly committed to enforcement we could probably assume Greece would've been evicted out of the trade bloc long before the political chaos erupted onto the street of Athens. We could also say the propensity to stay within Europe for the UK could've been avoided had it not been for the lapse of security detail on European borders that compromises citizens safety.
Europe's big push to coerce member nations to give up their sovereignty is failing to convince nations of its worth if a common currency free market agreement hasn't worked. This is just another example of the EU's attempt to create fairness in how it sees it but neglects to take into account the different political will and beliefs that occur in each nation.
It's highly unlikely it'll succeed in proving its case in this matter and will continue to create a divergence in tax rates charged amongst member nations that'll ultimately prove the concept of a united Europe is doomed to fail.
