Cork brushes off Apple tax claims
By Vincent Boland in Cork - October 3, 2014 7:28 pm
Two men in yellow hazmat jackets are washing the windows at Apple’s super-modern Irish headquarters
on a hilltop overlooking the city of Cork, on Ireland’s south coast. The enormous car park is almost full.
The new road built around the plant is as smooth as a tennis court.
It appears to be business as usual at Cork’s largest private-sector employer one sunny morning this week.
Yet this plant – opened amid fanfare earlier this year by Enda Kenny, the taoiseach (prime minister) – is at
the centre of a problem that may be as serious as any faced by Apple since its brush with bankruptcy in the
late 1990s.
The technology giant was accused by the European Commission this week of striking “sweetheart”
agreements with the Irish government dating back to 1991 in which the terms under which Apple would be
taxed were effectively dictated by the company. The Commission alleges these agreements enabled Apple
to avoid paying hundreds of millions of dollars in corporate taxes potentially owed to the Irish state.
In return for minimal tax bills, the allegation continues, Apple poured investment into Ireland, and Cork in
particular. That has created some 4,000 jobs over the past three decades at the plant in the Hollyhill
industrial estate, adjacent to the deprived district of Knocknaheeny, where piles of garbage have been
left in the area’s few green spaces and youngsters go joyriding for lack of other things to do.
Apple and the Irish government deny there are any sweetheart deals related to “transfer pricing”, and the
company is adamant that it pays all the taxes owes on the operations it carries out behind Hollyhill’s
corporate-grey walls. And many people in the “real capital of Ireland”, as the people of Cork like to think
of their city, are ready to defend their prized foreign investor.
“You have to wonder whether Apple would be here in the first place” without a bit of give and take on both
sides, says Conor Higgins, a 23-year-old law student at University College Cork, as he takes a break from
a lunchtime walk on Saint Patrick Street, the city’s main commercial thoroughfare. “In certain circumstances
I think it [jobs versus taxes] can be a fair trade-off.”
At Cork’s magnificent City Hall, mayor Mary Shields does not go quite that far. “I would prefer if companies
complied with the tax laws of the countries they are in, as I believe Apple are doing,” she says, sitting
beneath a portrait of Terence McSweeney, her famous predecessor, who died on hunger strike in a British
prison during Ireland’s war of independence in 1920.
“Obviously,” she adds, “other countries would love to have Apple. But they are in Cork and we want to keep
them here.”
Apple started in Ireland in 1980 with a manufacturing plant and 60 employees; it has since expanded into
trading and services for the company’s global operations. Its established presence has lured others like
EMC, the data storage company, and Logitech.
All of them followed the path hewn by Pfizer, the pharmaceutical company that established its operations
near the city in 1969 and now has eight plants and 4,000 employees in Ireland. US multinationals employ
around 120,000 people in Ireland. Cork’s cluster of tech and pharma companies has become one of its key
strategic advantages for Ireland.
One of the attractions for foreign direct investors coming to Ireland is the country’s 12.5 per cent corporate
tax rate, one of the lowest in Europe. The rate is under attack from US and French politicians, who claim it
makes Ireland little more than a tax haven. But the Apple controversy is not about its headline tax rate. It
has to do with the thicket of tax and legal loopholes that successive governments have encouraged to
sprout at the feet of its headline rate, in order to keep the flow of FDI coming.
The European Commission investigation is likely to take many months to complete. A negative verdict
could force Apple to pay an enormous bill for back taxes that the Irish government insists it is not owed.
It is one reason the Irish state is so sensitive to the case. For the people of Cork, the stakes are even
higher.
“Apple has real operations in Cork doing real activities and employing 4,000 real people doing real jobs,”
says Conor Healy, chief executive of the Cork Chamber of Commerce. “Apple is intrinsic to the economy
here.”
(From ft.com )
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