Apple scrapped plans for a billion dollar data center in Ireland citing frustration over planning delays. IDA Ireland, the agency responsible for attracting foreign investment, warned of potential global investment fallout as a result.
Ireland is home to Apple’s European headquarters, with the two sharing a symbiotic relationship. Ireland has the lowest corporate tax rate in western Europe, and Apple provides it with a marquee name to attract further technology investments.
Apple stated the planning delays on its data center would not “dampen [its] enthusiasm for future projects in Ireland”. However, there’s a story playing out that’s more than just frustration in the planning process.
Ireland is business-friendly; so much so that it’s arguably a tax haven. Or, more accurately, was a tax haven. The European commission ruled in 2016 that the Irish government granted illegal aid to Apple by keeping its tax bill artificially low for over 20 years. How low? Apple was ordered to pay $15.5 billion in unpaid taxes. Both Apple and Ireland are appealing the ruling.
Given this happening in the background, the new data center–and Apple investments in general–were under scrutiny. Countries (as well as individual states in the U.S.) fight hard to win hyperscale data centers. They’re massive investments, arguably bringing in more technology investments on their coattails.
Municipalities and countries offer increasingly aggressive tax cuts to win, and technology companies often pit them against one another in a bidding war. For a marquee name like Apple, the red carpet is rolled out. The European commission ruling put a damper on things.
The public perception of winning these deals becomes unfavorable when incentives wipe out too much of the perceived benefit. This hasn’t necessarily happened in Ireland, as Apple and other technology investments have been a boon. Ireland’s push to become a technology hub has led to several mega-builds and new headquarters in the country.
The country’s business minister said the cancellation “underlined need to make the State’s planning and legal processes more efficient”.