THE DECISION WITHIN the past week by the EU Commission that Apple must pay $US$14.5 billion to Ireland because the commission thinks that the low tax treatment of Apple is in breach of competition rules, is a startling development to which Barbadians must pay attention.
To put it bluntly, the Irish government, as a matter of deliberate national tax policy, decided to attract multinational companies to its shores by establishing itself as an international financial centre in which such companies pay a lesser tax than they would pay if all their profits were repatriated to their home countries. But the government of Ireland says that Apple does not owe them any taxes.
In this country we well understand the position. In return for smaller rates of corporation tax, and similarly to Ireland, our country gets other spin- offs in terms of foreign exchange, provision of high paying jobs, increases in tourism from necessary business travel, and a host of other collateral benefits. In a real sense we have common interests with the Irish.
In the case of Apple, some 6 000 jobs have been created, millions of dollars in taxes have been paid and both Apple and the Irish government have no problem with the arrangement. In fact the Irish finance minister has said that he disagrees profoundly with the commission’s decision, and he went on to say that the Irish tax system was founded on the strict application of law as enacted by parliament without exception.
Here in Barbados we can identify with this situation because we have had some of the international bodies like the Organisation for Economic Cooperation and Development either blacklisting us or vehemently disagreeing with us because we have done a similar thing as the Irish in creating favourable tax regimes to attract some of the world’s multinationals to establish subsidiary companies here. So that any attack on clean jurisdictions like Ireland must concern us.
It is true that these organisations cannot directly dictate our tax policy and deliver rulings identical to the Irish decision, but the frontal assault that has been mounted on countries like Barbados can have a similarly hurtful impact on our tax and economic policy, since non- compliance with the directives could mean that offshore companies might stay away from blacklisted countries.
In the face of this kind of action, if we are to protect and grow our offshore sector, local authorities both in the government and private professional sector must maintain cutting-edge positions in this area and thus be able to anticipate and plan for tsunami-like events which can devastate a vital aspect of our economy.
In the Apple situation, the irony is that the United States which has frowned on offshore centres now finds itself violently disagreeing with the European Commission, with one official describing the decision as awful and in direct violation of many of the treaty obligations of many European countries.
Independence has given us our freedom to associate with any country which shares our interests, but as modern society becomes more complex we have to clearly identify our interests.
Our national development scholarships must identify areas of specific study, critical to our offshore sector so that we can challenge rulings and directives which, if left unanswered, can undermine our economic interests.
Our voice must be loudly heard in defence of our interests wherever and whenever those interests are in play.
