DUBLIN, Sept. 5 (Xinhua) -- Credit rating agency Fitch said on Monday that the European Commission's Apple tax ruling has "mixed implications" for the country's sovereign credit profile.
In a statement, Fitch said the ruling could result in a substantial one-off improvement to Ireland's fiscal position, but may also add to medium-term economic uncertainty and increase political risks.
On Aug. 30, the European Commission said Apple should pay up to 13 billion euros (about 14.5 billion U.S. dollars) in taxes, plus interest, to the Irish government, because Apple's tax arrangements enabled it to pay less than other companies and were illegal under EU state aid rules.
Both the Irish government and Apple have said they will appeal the decision, a process that could take several years. The European Commission has said the amount could fall, depending on developments in other jurisdictions.
"If upheld, the European Commission's ruling would represent a substantial one-off fiscal windfall for Ireland," Fitch said.
"Excluding interest, the payment to the Irish government could amount to around 5.1 percent of 2015 GDP. If used to pay down debt and/or reduce borrowing rather than spent, this would accelerate the improvement in public debt dynamics that has been driven by fiscal consolidation and robust nominal growth," it said.
The credit rating agency predicted Ireland's gross general government debt will fall to 63.7 percent of GDP in 2020, down from 78.7 percent in 2015.
"These do not factor in any impact from the Apple ruling but do incorporate the large upward revision to 2015 growth announced in July, mainly related to the reassessment of intangible assets of re-domiciled Irish companies and contract manufacturing," it said.
It also said any such benefit would be "partly offset by increased uncertainty over Ireland's attraction to global businesses potentially damaging FDI and employment."
But Fitch said this risk is "limited", because Ireland's low 12.5 percent corporate tax rate, and its high human development and governance indicators should keep the business environment attractive to multinationals, and the costs of relocating would be large.
The credit rating agency said the Apple ruling could add to uncertainty created by the Brexit referendum, which it said will slow export and investment growth.
It said divisions within Prime Minister Enda Kenny's minority government have become more evident despite a cabinet decision on Friday to formally lodge an appeal against the European Commission.
This shows the challenge that the minority government faces in formulating and enacting policy, Fitch said, adding that it has already been outvoted in parliament on some minor economic issues since its formation in May.
"A more unstable political backdrop would add to fiscal and economic risks," it concluded.
