Adam Davidson, a business journalist with the New Yorker magazine, has an all too accurate examination of Ireland’s phantom economy in the wake of the Apple tax scandal.
“There are two equally valid, yet seemingly incompatible, ways of viewing Apple Computer’s relationship with Ireland. The first way, which is the one that Apple and the Irish government prefer, is embodied in the Apple campus that sits near the corner of Harbour View Road and Ardcullen, in the Holyhill Industrial Estate, not far from the centre of Cork. The buildings are filled with employees doing meaningful work. There is a small manufacturing operation, the only factory actually owned by Apple, assembling iMacs. There is a logistics operation, serving Apple Stores all over Europe. There are marketing people and technical-support pros, able to solve problems in nearly every European language…
But there’s another Apple that sort of exists in Ireland, and also sort of doesn’t. That Apple is the one that is causing some international distress this week. People in the know—there aren’t many—simply call it A.O.I., short for Apple Operations International. And this version of Apple is much harder to pin down; it’s something like a quantum corporation whose very nature depends on who is observing it. A.O.I. is, in one sense, huge, among the largest companies that ever existed, with more than two hundred billion dollars in assets. It is also as small as a company can be, with no physical address and no employees. Phillip Bullock, the head of tax operations for Apple, told a U.S. Senate committee in 2013 that “A.O.I. is incorporated in Ireland; thus, under U.S. law it is not tax resident in the U.S.” That seemed clear enough until his next sentence. “A.O.I. is also not tax resident in Ireland because it does not meet the fact-specific residency requirements of Irish law.” It’s Irish, according to American law; not Irish, according to the Irish. A.O.I., in fact, does not legally exist anywhere…”
Read the whole piece to get an impression of how the rest of the world views the questionable taxation practices of the Irish state, practices quite different from those imposed upon the vast majority of its citizens. From building a rotten Celtic Tiger economy in the early 2000s to selling rotten FDI incentives the political establishment has shown itself the equal of its peers in Switzerland and Hong Kong.
“Irish authorities have become among the world’s leading taxation tinkerers. There’s the Double Irish with a Dutch Sandwich, a complex scheme in which Google and others would form two distinct Irish subsidiaries, a Dutch subsidiary, and another in one of the small island offshore havens. Profits are passed from one subsidiary to the next, moving, on paper, from Ireland to Holland to the Caribbean, then back to Ireland.”