‘Tax justice delayed is tax justice denied,’ says the Tax Justice Network
The Tax Justice Network welcomes the ruling of the European Court of Justice, that Apple must repay EUR 13 billion in underpaid taxes.1 But the ruling only serves to highlight the abject failure of international tax rules to protect the right of countries to tax the economic activity located in their own jurisdictions. This points to the urgency of the global reform process now underway through the negotiation of a UN framework convention on international tax cooperation.
The court ruling overturns an earlier victory for Apple in a lower court. It confirms that Apple benefited from selective tax treatment in Ireland that was not necessarily available to other multinationals, and therefore must be repaid. The original case against Apple was brought by the European Commission under the state aid rules, and the selectivity of the tax treatment is the key issue. But this itself reflects the failure of tax rules.
The fundamental issue at stake now isn’t whether Apple obtained a slightly better tax deal than its rivals, but that Ireland has conspired, for decades, to provide multinational companies with the opportunity to avoid paying tax on profits they extract from countries across the European Union. The Netherlands and a number of other EU members have also played an aggressive role in these antisocial attempts to undermine their neighbours’ taxing rights.
And so while it is welcome that Apple will be required to pay a somewhat fairer tax bill for some previous years, making its profit shifting into Ireland retrospectively less rewarding, the structural failure of the tax rules has been left untouched. Today’s ruling will do nothing to address the huge revenue losses that Ireland has imposed on other EU countries over the years since the Apple case began, nor those of other corporate tax havens. (The new edition of the Tax Justice Network’s Corporate Tax Haven Index will be published on 1 October 2024, revealing the most damaging and aggressive havens globally.)
Tax Justice Network’s CEO Alex Cobham said:
“We welcome the ruling that should require Apple finally to pay a little more tax in relation to its profit shifting into Ireland – but this does nothing to address the continuing abusive tax practices of multinationals across the EU and around the world, that are estimated to cost about half a trillion dollars in lost revenues every single year since the Apple case began. Tax justice delayed is tax justice denied, and so there is little tax justice to celebrate today.
“What the Apple case points to is the need for a comprehensive reform of international tax rules – something the OECD has painfully failed to deliver over the last decade. In New York last month, we were delighted to see the European Union remove its objections to the negotiation of a comprehensive UN framework convention on international tax cooperation. This offers the best chance in a century for progress against international tax abuse, and EU policymakers should now join the countries of the world in pushing for an ambitious, effective and inclusive outcome. EU countries are among the biggest losers to corporate tax abuse, resulting in the damaging loss of public services across the bloc, so EU citizens stand to gain enormously from progress at the UN.”2
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Notes to editors