Following the EU Commission’s findings released on 29^th August, Irish politicians and commentators, as well as some further afield, have struggled to find the correct response. In the end the Irish government agreed to join Apple in lodging an appeal against the findings.

The methods that Apple, and some other large corporations, use in order to avoid paying tax are well enough documented. A complex series of financial transfers enables Apple to show the greater portion of its profits as eligible for tax in a jurisdiction where the tax rate is zero. It pays tax in Ireland at 12.5% on the tiny residual profit left after deducting the ‘expense’ of paying its parent company, registered in a tax haven, for the use of intellectual property owned by the parent.

Such schemes are widely regarded as immoral or unethical. I think there is another way of looking at it, especially with regard to this case and any others like it. The $14.5 billion tax bill with which Apple has been presented by the EU is retrospective. That is to say it relates to past business transactions. And that means the money has already been spent. Apple will now have to set aside a special fund of $14.5 billion in order to cover the possibility that its appeal might fail and that it will eventually have to pay up.

It will probably appear in Apple’s accounts as a ‘provision’ for future liability.

Over-taxed Irish citizens

The actual $14.5 billion that was not paid in taxes in past years was, of course, spent: in payments to suppliers and contractors, to employees, and as dividends to share holders. Each of these paid tax on that income. Some of them are Irish citizens. Like most Irish citizens they probably believe they are over-taxed, especially as they have to pay for some services that are free at the point of delivery elsewhere, notably in their close neighbour Britain. They might now believe that, had Apple and other large corporations paid more tax, they would have paid less. Is it really that simple?

Let’s start from the assertion that all money is nothing more than a token acknowledging someone’s work. So that $14.5 billion represents work undertaken by Apple employees, their suppliers, or contractors in various parts of the world, and their share-holders. Had they paid it over to the Irish government, the government would have used it to pay it’s employees, suppliers and contractors; to make welfare payments to its senior citizens, the unemployed and those on government sponsored work schemes. But Apple would have had less money available to pay to its employees, suppliers and share-holders.

So we come down to the question of which is the greater good? The private, corporate sector producing all the modern conveniences we take so much for granted, or the public sector? And what is the proper balance between the two? It’s a question that has formed the basis of election manifestos for many generations and that will not go away any time soon.

Ireland is presently in the throes of an escalating series of public sector pay disputes. No doubt some of those public servants who believe themselves to be under-rewarded would be delighted to get their hands on a share of the €13 billion, should it one day arrive in the government’s coffers. But then, I guess there are governments in other jurisdictions, not least the USA, who believe that a share of Apple’s unpaid tax properly belongs to them