The European Commission ruled yesterday that Apple owes Ireland EUR 13 bn (that’s about 1.2 times the amount Egypt is seeking from the IMF) in back taxes, following a three-year investigation that concluded that Apple’s Irish tax benefits are illegal. “The standard rate of Irish corporate tax is 12.5%. The Commission’s investigation concluded that Apple had effectively paid 1% tax on its European profits in 2003 and about 0.005% in 2014,” BBC says. The amount the Commission is asking Apple to repay is equivalent to all of Ireland’s healthcare budget and 66% of its social welfare spending.

Do you think Dublin is happy about it? Wrong. Ireland is fuming, with Finance Minister Michael Noonan saying "I disagree profoundly with the Commission … The decision leaves me with no choice but to seek cabinet approval to appeal. This is necessary to defend the integrity of our tax system; to provide tax certainty to business; and to challenge the encroachment of EU state aid rules into the sovereign member state competence of taxation.” Ireland’s tax system is one of the competitive advantages it has over other EU countries, making it particularly attractive to high-tech companies. Google’s EU headquarters are not in London, Paris, or Frankfurt, it’s in Dublin, ditto Facebook’s International headquarters, Yahoo’s, and Airbnb’s. Noonan is just trying to protect jobs in Ireland and maintain the country’s attractiveness to international investors. The case, controversial as it is, and in the light of Egypt just passing a VAT law, shows how powerful competitive tax policy can be.

If you want to know more about how Apple (and other companies) have managed to move about with paying so little in taxes, learn more about the “double Irish” and “double Irish with Dutch sandwich” arrangements.