European Competition Commissioner Margrethe Vestager will get a frosty enough response today in Washington. But one thing is clear a few weeks after the momentous decision that Apple owes Ireland €13 billion in "back tax." It is that Vestager is winning the PR battle, a fact that her US hosts will be conscious of, as will the Government here.
The legal rights and wrongs of the European Commission’s decision on Apple’s tax arrangements in Ireland will be fought out line by line in the European courts. But it is clear that, what ever happens in a few year’s time in the European Court of Justice, Vestager, has grabbed the moment with what was effectively a huge political statement - that Apple owed billions in back. And Ireland is stuck right in the middle.
Visiting Washington today, Vestager is trying to walk the line - saying she is not unfairly targeting US companies , but also hinting that more investigations may be to come. These investigations may cover European companies as well, but everyone knows that what is central here are the tax arrangements used by US companies to avoid- or technically,defer - paying tax on profits earned in markets outside the US.
Whether Vestager’s case holds up in the courts or not, the details of these tax schemes have, since they started to emerge fully a few years ago, shown a ruthless efficiency in cutting tax bills. This may, in many cases, have been legal - and as regards Apple the courts will rule on this - but it is completely indefensible. In PR terms, the Commissioner is shooting at an open goal - and the very scale of the tax bill she claims that Apple owes to Ireland has put the Commission at the centre of this big global battle over how multinationals will pay more tax. Whether her technical legal arguments hold up or not, she has engineered a political coup.
It has been clear for a few years that multinationals were going to end up paying more tax. In an era where, post-crash, exchequers are squeezed for cash, their tax arrangements are unsustainable. The game is up, the only questions was whether the OECD-led process under which companies were gradually being pulled into paying more was going to be enough. Commissioner Vestager’s move has upped the ante, with goodness knows what consequences.
Whether she wins the legal battle or not, she is already well ahead in the PR war.
