On Wednesday morning, I made a speech in London to the Irish business community on Brexit, Europe and the world economy. After the speech I logged on and answered a few questions on my Facebook page.

Obviously as I was using Facebook, various ads came up on the screen. Looking out from the hotel room at Tower Bridge, it struck me as odd that the revenue from these ads was not going to the British tax authorities, but was being diverted to Ireland and being taxed in Ireland, despite the fact that I was clearly in England.

You don’t have to work for the British taxman to realise that this is highly questionable.

In 2014, Facebook caused uproar across the water when it was revealed that one of the richest companies in the world paid just £4,327 in corporation tax (20 per cent). This ridiculous sum is less than a single British worker on an average salary of £26,500 would pay (£3,180 in income tax and £2,213 in national insurance contributions).

When you dig a bit deeper into the figures, Facebook suggested that it had British revenues of £105 million. This is a company with global profits of $2.9 billion and revenue of $12.5 billion.

Could it be plausible that operations in the fifth largest economy in the world, with a rich population of 65 million people and internet usage among the highest on the planet, could account for less than 1 per cent of Facebook’s global revenues?

Obviously, this revelation caused a massive political storm in Britain. Politicians on both right and left demanded that the US mega-company pay its fair share of tax.

The problem for Ireland is that the revenues were being diverted from England to Ireland. We were party to it by accepting what might be called ‘ghost revenues’. These are revenues booked in Ireland, which were not generated in Ireland.

Many years ago, this column coined the phrase ‘ghost estates’, referring to estates that were being built that would never be occupied. Now we have ghost revenues. These are revenues that are being booked here, but which could never have been generated here.

It’s a grubby little game of beggar my neighbour. We have been playing it for a while and it is little more than a trick that risks the reputation of this country to enrich Facebook’s shareholders. It also exposes us as being quite happy to go along with financial tricks simply to make corporations love us more.

Now, don’t get me wrong: it was the very British Lord Palmerston – he of Palmerston Road – who came up with the notion that countries don’t have friends, but interests. It has been in our interest to play this beggar thy neighbour game, but it is coming to an end. The British have just switched to poker and have raised the stakes hugely.

Last week, following relentless pressure from the British authorities, Facebook called time on ghost revenues. The Facebook top brass realise that their long-term interest is in ongoing British business and revenue, rather than worrying about the stability of the temporarily swollen Irish tax base.

In a terse but definitive statement, Facebook declared: “On Monday, we will start notifying large UK customers that from the start of April they will receive invoices from Facebook UK and not Facebook Ireland.

“What this means in practice is that UK sales made directly by our UK team will be booked in the UK, not Ireland . . . In light of changes to tax law in the UK, we felt this change would provide transparency to Facebook’s operations in the UK.”

Ireland Inc could have done without the direct reference to us, but that’s the truth. The British are calling us out. The question is whether the British will be the last.

What about other countries losing revenues to Ireland? Now that the British have fingered us directly, will the rest follow suit, examining the billions of ghost revenues that are funnelled into Ireland and claimed as domestic revenue?

The term ‘ghost estate’ stuck because after it was pointed out one Sunday morning in this paper, lots of people read it and thought: we’ve one of those estates, too, in our town. Will the British move spark the same realisation in other countries, leading to ‘me too’ tax claims being lodged everywhere?

The British treasury wouldn’t be specific on how much cash it is in line to get – and by extension, how much we are in line to lose – but added: “We do not comment on individual taxpayers. But HMRC ensures that all multinationals pay the tax due under UK law and we do not settle for a penny less.”

The “we do not settle for a penny less” is a veiled reference to the ongoing EU commission investigations into whether Ireland was doing individual deals, offering differing tax rates to different companies – specifically Apple.

At the moment, the EU and Apple are in a massive dispute. The position of the Irish government in this test case underscores the bizarre territory the Irish state has staked out. We have sided unambiguously with the management of the multinationals.

In fact, from an Irish taxpayer perspective, you couldn’t make this story up. In short, the nub of the case is that the EU wants Apple to pay the Irish exchequer more money – and Ireland is actively arguing against this.

We – a country with a budget deficit – want Apple to pay us less, not more, money. Is this a first?

The stakes are huge. If the EU ruling goes against Apple, our government could be forced to collect between about $8 billion and $19 billion. Yes, you read right: forced to collect.

The EU is saying that preferential tax deals are illegal state aids, which give the company an unfair advantage over their rivals.

The EU wants multinationals to undertake ‘country-by-country’ reporting, where they’d have to make public their revenues, profits and taxes paid in each country where they operate.

This is exactly what Facebook has done this week, under pressure from Britain. It has succumbed to country-by-country reporting. It is a game-changer for us because obviously our domestic market is tiny in comparison to the declared profits of multinationals operating here.

Isn’t it amazing that – in a week when a massive, landmark decision has been taken that could have enormous ramifications for Irish industry, the economy and the tax base – our politicians are arguing over Irish water?

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