Apple ordered to pay billions of dollars in back taxes in Ireland

The European Commission has ordered Apple to pay back taxes to Ireland, saying the country gave the company illegal tax benefits worth up to 13 billion euros, or $14.5 billion.

Ireland has a corporate tax rate of 12.5 percent; the commission said in its press release Tuesday that after two years of investigations, it found that the “selective treatment” Apple received from Ireland allowed it “to pay an effective corporate tax rate of 1 percent on its European profits in 2003 down to 0.005 percent in 2014.”

The commission said Apple’s tax deal with Ireland “enabled Apple to avoid taxation on almost all profits generated by sales of Apple products in the entire EU Single Market.”

“The Commission’s move is unprecedented and it has serious, wide-reaching implications,” Apple CEO Tim Cook said in an open letter posted to the company’s website Tuesday. “It is effectively proposing to replace Irish tax laws with a view of what the Commission thinks the law should have been.” He said the company will appeal.

The Irish government, which maintains low corporate tax rates to lure companies — Google and Facebook’s European headquarters are in Ireland — also said it was disappointed by the decision and would appeal.

Estimates about how much in back taxes Apple would have to pay to Ireland have varied. JPMorgan has warned that the bill could reach up to $19 billion, while the Irish Times has reported that the figure could be as low as $100 million.

Apple, which has a cash hoard of $231.5 billion, keeps most of it stashed overseas because of U.S. corporate tax rates. The Cupertino company is said to hold the most offshore profit among all U.S. companies.

Last year, Apple agreed to pay $350 million in back taxes to Italy after an investigation over the company’s shifting of profit made in Italy to its Irish subsidiary.

In 2014, Europe opened investigations into tax deals involving Ireland and Apple, Starbucks and the Netherlands and Fiat and Luxembourg. Other Silicon Valley tech companies’ tax deals in Europe are also under scrutiny.

Here is what the European Commission says Apple did, according to a graphic the commission posted on its website.

ECvsApple

For more on this story, go to SiliconValley.com.

 

Photo: Apple CEO Tim Cook walks off the stage after speaking during the Apple Worldwide Developers Conference on June 2, 2014 in San Francisco, California. (Justin Sullivan/Getty Images)

 

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  • Reedman Bassoon

    Tim Cook is reaping what his support of big-government liberals sowed. The EU hates private companies, and especially hates US private companies (hint: the EU is so socialist, that the Irish people and the Irish government aren’t allowed to have their own tax policy, are aren’t allowed to sign tax agreements). The EU needs 100% tax rates to pay for all the government benefits promised. The EU is simply telling Apple that every dollar/euro in the EU economy belongs to the EU (no profits allowed).

    • Lafayette Escadrill

      As I have grown older, I have come to really DESPISE government.

    • sd

      Simplistic, dontchathink? *Assuming* for the moment that providing citizens with medical care, education, and a social safety net is now “radical” and “liberal”, even the EU understands companies need to stay in business to continue paying taxes, employing people, etc.

      What they’re saying is that if a country wants to benefit from the efficiencies of EU market policies, there are agreed-upon rules to be followed. If Ireland thinks they’re so much better off without the EU, let them stage “Irxit” and then they can treat company profits as they damn well please and the EU is free to treat Ireland as an outside country. Considering Britain’s foot-dragging on the way to implementing Brexit, maybe that’s not such a great thing to do.

      Enough with privatizing profit and socializing loss. Enabling that politically has hollowed out America and it will do the same anywhere else similar policies are in place. Companies benefit from a healthy educated workforce and from police and legal protections. Why give them a pass on funding that?

 
 
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