CNBC Transcript: Interview with Enda Kenny, Prime Minister of the Republic of Ireland

Following are excerpts from a CNBC interview with Julia Chatterley and Enda Kenny, Prime Minister of the Republic of Ireland.

JC: Tell me why you're confident this appeal will succeed.

EK: The decision will be made ultimately by the European judicial system. I'm confident that we will win this case because in our view the European commission have made finding here, dealing with state aid, which crosses the threshold into tax competency which is a matter for each individual country. In Ireland here revenue commissioners have always been completely independent of the state since 1923 and they are quite adamant and quite clear that there was no preferential treatment, no special deals, no sweetheart deals and apple paid the taxes that were due under profits generated here in this country.

JC: So as you said Apple has not received any preferential treatment here so I assume that the likes of Google, Alphabet, Microsoft have been given the same treatment. Does that mean the risk here now is that the European Commission slap them with so-called unpaid tax fines

EK: Well we're very clear that the revenue commissions have not done sweetheart deals or any special deals. That is not the way do business here. This is actually is more important in the sense of standing up for small countries. The European Commission since we joined the Union back in the 70s - and for all small countries – was always a backdrop that one could revert to. What's happened here, in my view is an interference with our sovereign right as a small nation as a country and as a sovereign government to decide what are the most appropriate policies for our people for careers and jobs and opportunities within the rules and regulations and laws that we follow. And as I said, I make no apology for standing out for that. This is about our right as a country to decide the future of our people within the rules and regulations that everybody signed up for.

JC: But it's you saying if they're punishing you as an individual country and a small country in the EU then there is a risk that they could target other corporations that are operating here in Ireland. There is a risk isn't there?

EK: There are three other cases on appeal to the European court, to which Ireland is a part of. The amount mention here is a staggering amount in comparison to the other countries. So from that perspective, this may take a number of years to actually conclude. But it sends out the wrong signal from the commission. Particularly when Ireland has been one of the foremost players on the OECD programme to deal with this problem of a broken corporate tax system internationally by having an international response. We've changed our legislation here, we've gotten rid of the stateless concept. We've gotten rid of the so called "double-Irish concept". We're the first country to have a fully compliant OECD knowledge box of 6 and a quarter percent. And we've made our recommendations in respect of research and development.

JC: As you say this is a legacy issue now. You've done many measures and acted many measures to tackle this. So why are you concerned that accepting this money now from Apple will have an impact on future investment because it was an old issue? It's an old issue and we can move forward now with future investment.

EK: First of all the amount of money involved is quite unprecedented. Secondly, the Commission pointed out, some of that money may be due to other countries where profits generated some of that money may be due to the American treasury. So it's mirage money in many ways in that it's not ours to spend. Our revenue commissions are very happy and very clear that they showed no sweetheart deals and no preference for any company and never do and never have and never will.

JC: So what's your message here to the likes of Microsoft and to Apple in a sense about the risk that this could happen to them?

EK: Well the reasons that those companies came here, and there are over a thousand multi nationals in Ireland is not just because of corporate tax which has been the cornerstone of our system. It has neither moved up nor down. It's the same for all sectors, for all facilities throughout the entire country. But it's also to do with the talent pool that's coming through our education system. The fact that we have a proven track record. We have a very long legal system with the European Union and we're English speaking. They come here for those reasons as much as a static corporate tax system and we've made it perfectly clear the European Union treaties specifically states that tax is a matter of competence for each country. In our view, the finding by the European Commission interferes with the good name of this country and others. That it creates uncertainty for investors from abroad, and as has been pointed out, it is not a good signal. That's why the opinion of the European Commission has to be challenged. You must have legal certainty and the only way you can have that is by definition and decision of the European court.

JC: You're saying it's effectively a huge overreach here by the European Commission interfering in what an issue in true fact, fiscal policy of Ireland. Is it this kind of interference that people around Europe are pushing back on here? I mean is there a risk that this leads Ireland down a similar path that the UK. Are we looking at the risk of an IRE-exit at some point in the future?

EK: We're not, Ireland a number of years ago made a very clear decision 60 40 in favour by referendum, to stand by the fiscal stability treaty. That means we link our future to the euro, Eurozone and to the European Union. And whilst being the nearest neighbour of the United Kingdom, we've obviously a common travel area, have very close working relationships with the UK for very many years and there is trade in excess of a billion euros across the Irish sea every week.

JC: But this kind of interference in the commission is what fuels nationalist sense…

EK: From an OECD prospective, you need an international response to an international phenomenon. Ireland cannot become the collector general for the world. We can only tax on profits generated in the country here. And Apple have paid their taxes in respect of those profits generated by economic activity here in Ireland.

JC: Are they paying a fair amount of tax in Ireland?

EK: 400 million is the figure that they have given. These matters are confidential and not known by me, because the revenue commissioners operate independently. But the important point here is that investors in the past and investors in the future like to have certainty. This decision creates uncertainty for very many countries in Europe and the way that you bring certainty to that is by having clarity of decision by the European court system. We believe in this case.

JC: And what about voters? Are voters on your side because it's very difficult for you to say look, we're not going to accept 13 billion euros, which is the equivalent of your healthcare budget. It's a difficult concept for Irish voters to get.

EK: The money is not there to touch. It's not there to spend. There is glass pane between the money and the country.

JC: Some could say you're owed it.

EK: From the company's point of view Apple are perceiving to defend their case by perceiving to defend this by appealing their case. We recalled our parliament to vote on this to follow a government decision made last week to instruct the attorney general to do that. And we do that for a reason of sending out a very clear signal that we have never messed around with our legislation and our revenue commissioners have interpreted that 100 percent and the company have paid their due under Irish law. But the commission saying on the one hand that Ireland should have collected all the profits, that taxable profits globally, at the same time they say other countries in Europe should look at this figure and see how much of it belongs to them and the American government should look and see how much it belongs to them. So it's in a way it's, this is going to take a number of years to decide. But from our point of view we want clarity and certainty and that's a European court decision.

JC: The U.S. Treasury has also been very vocal on this issue. Should they also step up here and decicde what they need to do about their tax policy to pull this cash back effectively to their country if they have an issue with it?

EK: Yes. Well every time there's a presidential election in the United States and you have talk about changing the legislation as far as tax is concerned. There are about three trillion dollars overseas from America and it's not taxed until that's repatriated. Now there are different comments being made in respect to the presidential election, but clearly year in the U.S treasury have made a very serious comment about this. Depending on what the people elect in the November election, there may well be a decision by whoever the incoming president is to change American tax legislation. It does require an international response. And that's why I repeat again, Ireland has been at the forefront of changes by the OECD and 15 different reports on profit shifting. We're right out at the front there and have changed our own legislation on a number of occasions in the recent past. This decision does not lend itself to clarity and certainty from the European investment perspective. But it's not just about Ireland. Ireland cannot solve this on our own but we're doing our part. Everybody else has got to measure up as well.


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