Irish tech city trembles at Apple tax probe

Perched on top of a hill overlooking the Irish city of Cork, surrounded by a dated industrial estate, Apple’s European headquarters is an unlikely base for the world tech giant — now under growing scrutiny over its local tax arrangements.

The company has been in Cork since 1980 but the European Commission’s suggestion that its tax deal with Ireland may amount to illegal state aid has drawn new attention on the Irish link for the makers of the iPhone and the iPad.

“We’d be devastated without Apple,” Cork’s mayor, Mary Shields, told AFP.

“It worries me and would be hugely damaging to the economy if anything happened to Apple.”

Apple has reportedly been paying an effective corporate tax rate of as little as 2.0 percent in Ireland, far below the country’s already competitive rate of 12.5 percent — a widely criticised deal that has been repeatedly defended by Dublin.

But at the Old Post Office cafe, owner Vikki O’Keefe was in no doubt about the importance of the giant’s two local facilities which employ 4,000 people and give jobs to 2,500 more.

“Apple bring a lot of people to this city and many of them stay,” she said, stepping back behind the counter at one point to serve an Apple employee who is a regular.

“This area tends to have gotten much younger over the last few years as people come here from all over to work for Apple,” said O’Keefe, who also rents a house out to Apple employees.

When the Cork operations opened, Apple had a manufacturing plant but has since evolved to have a more diverse output, including tech-support and sales.

In the last five years, the company has doubled its workforce in the city to 4,000 people and invested 100 million euros ($126 million) in upgrading the facilities.

“From a Cork point of view we’re focused very much on Apple’s activity here and they’re very real activities,” said Conor Healy, chief executive of the local chamber of commerce.

“Both government and Apple have said no rules have been broken, so from that perspective that’s how we take it,” he said.

Apple was one of the first tech firms to set up in Ireland and has been followed by many top names such as Twitter, Microsoft and Google, earning the country the moniker “Europe’s Silicon Valley”.

Cork has also benefited from the presence of other multinationals such as EMC, Boston Scientific and Amazon.

Many would argue they are there for favourable tax rates but a pool of young tech talent has also built up over the years.

And the prospect of the European Commission’s tax probe currently underway damaging relations between Ireland’s second city and its technology cluster is an unsettling prospect here.

– ‘Wink wink, nudge nudge’ –

Outside the Cork Opera House, near Apple’s second facility in the city, passer-by Gosia said she was not bothered about the company paying a low tax in Ireland.

“People care about jobs more. They do not think of the taxes,” said Gosia, who moved to Cork from Poland in the 2000s.

But Michael, 41, said: “Everyone should have to pay the same tax, it makes sense, right?”

The case has reignited debate on Ireland’s tax regime, with the left-wing opposition Sinn Fein party calling for a review.

Ireland South MEP Liadh Ni Riada from Sinn Fein, who also represents Cork, accused Dublin of ignoring the issue.

“It’s quite a debacle. It’s embarrassing,” she told AFP.

“We can’t be seen to be an Ireland that does have that ‘wink wink, nudge nudge’ culture. We must be seen to be straight-up about things.”

Both Dublin and Apple insist they have no case to answer and the finance ministry has said it is confident that “there is no breach of state aid rules in this case”.

Apple?s chief financial officer, Luca Maestri, told the Financial Times in a recent interview that Apple had no plans to quit Ireland, regardless of the outcome of the Brussels investigation.

“It’s very important that people understand that there was no special deal that we cut with Ireland. We simply followed the laws in the country over the 35 years that we have been in Ireland,” he told the newspaper.

Mayor Shields admitted the tax system may need “regularising” but not at the expense of losing Apple.

“I hope it doesn’t damage any relations that we have with Apple.”