Apple Could Owe More Than $8 Billion in European Tax Probe

The European commission’s recent ruling against tax breaks for multinational corporations in Belgium strongly suggests that the tech behemoth could be subject to a hefty bill when the open investigation against its activities in Ireland concludes.

The probe dates back to 2014 and a long delayed decision is expected later this year.

If the Commission finds against Ireland’s tax administration, and is able to enforce a tougher accounting standard, Apple could be charged back taxes at Ireland’s 12.5pc rate, on $64.1bn in profit generated from 2004 to 2012.

If the Company’s effective tax rates were to increase, particularly in the US or Ireland, or if the ultimate determination of the Company’s taxes owed is for an amount in excess of amounts previously accrued, the Company’s financial condition, operating results and cash flows could be adversely affected. Apple however, is perhaps the highest-profile case of the USA enterprise facing such an issue.

These will include Starbucks, Amazon.com and McDonald’s.

Apple, which had said it would appeal any adverse ruling by the EC, had been under the scrutiny of regulators who had accused the iPhone-maker of using subsidiaries in Ireland to avoid paying taxes on revenue generated outside the US. In a letter to US Treasury Secretary Jack Lew, bipartisan members of the Senate Finance Committee asked the administration to make sure that European regulators won’t impose retroactive penalties like those that would hit Apple.

Apple has begun listing scrutiny of its taxes as a risk factor in regulatory filings to investors.

CEO Tim Cook has denied that the company isn’t paying its fair shares of taxes. While Apple generates about 55 percent of its revenue outside the US, its foreign tax rate is about 1.8 percent, according to the analysis. He added that Apple has fully paid the taxes and that the EC needs to update the outdated tax system for accurate calculations.

Kristin Huguet, a spokeswoman for Apple, didn’t return a call seeking comment.

For now, Apple will continue to play by its own rules until the European Commission and the U.S. IRS decide to clamp down on Apple which could as early as this spring.