The Apple tax ruling and the implications for its Irish operations
By Will Goodbody, Science & Technology Correspondent
The Apple tax ruling is an extraordinary multi-faceted and many layered story, with implications regionally, nationally, internationally.
The announcement that the amount of unpaid taxes owed by the Cupertino based company was of the order of €13bn, likely induced sharp intakes of breath among foreign multinational executives here.
But regardless of the rights and wrongs of the situation, what does it all mean for Apple’s operations in Ireland, for the tech industry here, and the wider Irish foreign direct investment space?
Apple has had operations in Cork since 1980, when the fledgling company opened its European Headquarters in the city.
Since then it has slowly, steadily and to an extent quietly grown its presence to become arguably the most influential employer in the region.
Almost 6,000 people are now employed there in a variety of roles, including manufacturing of Mac computers and other devices, supply chain management, operations, sales, risk management, shared services and more.
Nearly 1,000 of those have been added in the past year, following an investment announcement last November timed to coincide with the visit of Apple CEO Tim Cook to the plant.
On Friday the company received planning permission for a new 15,000 square metre building to accommodate the new recruits.
There are also thousands more employed in the wider regional and national economy as a result of the company’s strong foundations in the city.
The presence of such a significant player has helped in the development of a vibrant tech ecosystem in the city and surrounds, with a burgeoning startup scene and the arrival of many other tech multinationals.
Elsewhere in Athenry in Galway, Apple has been granted permission to build an €850 million data centre on a 500 acre greenfield site to store customer data and run many of its online services like iTunes.
Between the two sites, the company is set to plough hundreds of millions of euro into the Irish economy in the coming years.
So the prospect of a change of attitude towards Ireland would be deeply worrying for all Apple staff here, not to mention the government and public at large.
Thankfully, as big a potential setback as today’s ruling might seem for the company, it seems unlikely to alter its outlook.
Tim Cook the Apple CEO said so in his open letter to customers today.
“We are committed to Ireland and we plan to continue investing there, growing and serving our customers with the same level of passion and commitment,” he wrote.
The company is in deep here, and although tax may have always been or may have become a major consideration, it is unlikely a change of policy is going to result in it suddenly downsizing or pulling out.
After all, this clampdown on the tax arrangements of big multinationals is an international phenomenon now, meaning it won’t be easy to find anywhere that is more welcoming from a tax perspective.
Plus it has invested huge amounts not just in buildings and infrastructure, but also in people – and after all, as we learned today it is the intellectual property generated by those brains which makes vast amounts of money for Apple.
And don’t forget the $231bn it has sitting on its balance sheet, which makes the €13bn it may have to pay Ireland look like relatively small change!
WIDER TECH SCENCE
So what then for the wider tech industry in Ireland and the FDI scene here more generally?
There is little doubt that many bosses will have been spooked by today’s ruling, not solely because of the tax issue, but because of the uncertainty it has generated.
The American Chamber of Commerce and the government say it is their understanding that no other US company operations in Ireland are having their tax affairs scrutinised by the European Commission in the same as Apple has had.
That should come as a relief.
And contacts I have had with a number of large high-profile tech multinationals today seemed to back that assertion up.
But even if no others are likely to be hit with big back tax and interest bills as Apple has been, there is the general uncertainty.
The mere thought that a supranational body like the EU can make seemingly retrospective rulings like it has in the case of tax, will be enough to spook many.
And it all comes on the back of a perceived hostility towards US multinational tech companies from Europe in relation to wider competition issues (e.g. Google) and on data protection too (e.g. Facebook).
There are also changes afoot at EU level around digital borders and net neutrality which many ICT companies may not be happy with.
The IDA came out strongly today and said while the Apple ruling would be unhelpful for Ireland and Europe in general when it comes to attracting business, it remains optimistic about Ireland’s long-term prospects for winning FDI.
What else could it say in the circumstances?
Only time will tell if its optimism is well or misplaced.
Comments welcome via Twitter to @willgoodbody