DUBLIN, Feb. 2 (Xinhua) -- Ireland was in talks with U.S. tech firm Apple over setting up an escrow account for the 13 billion euros (13.9 billion U.S. dollars) the European Commission (EC) says is due to Ireland in back taxes, pending the outcome of an appeal against the EC's ruling, a cabinet minister said on Thursday.
"Irish officials are currently negotiating the terms of such an escrow fund which may be established by a commercial contract with Apple, subject to the views of the Commission," Irish Finance Minister Michael Noonan said in an address to parliament.
In August last year, the EC ruled that Ireland granted undue tax benefits of up to 13 billion euros to Apple, saying that "selective treatment" allowed Apple to pay a tax rate of 1 percent on EU profits in 2003 down to 0.005 percent in 2014.
In response to the ruling, the Irish government decided to appeal to the Court of Justice of the European Union.
"Obviously, the terms of such an escrow fund are subject to confidential and commercially sensitive considerations and as a result I will not be able to discuss them at this time," he said.
In his address, Noonan argued that it is simply untrue that Ireland provided favorable treatment to Apple. He said that the EC is undermining the fundamental principle of international tax: that tax should be paid where the value is created.
He also said that in the ruling, the EC is attempting to rewrite Irish corporation tax legislation. "The government is of the view that there was no breach of state aid rules in this case and that the legislative provisions were correctly applied," Noonan said.
"By appealing the decision, the government is taking the necessary course of action to vigorously defend the Irish position," he said.
"Ireland has done nothing wrong here. We have a proven track record in international tax reform and a strong commitment to meeting the best international standards," he added.
At the center of the Apple controversy are two of the company's subsidiaries, Apple Operations Europe and Apple Sales International.
These firms were registered in Ireland, however, they were controlled in the United States where they held their board meetings. Revenue taxed the companies on the basis of their activities in Ireland, however, the EC says both companies should have been taxed by Ireland on the basis of their worldwide income.