Apple Owes Ireland $14.5 Billion In Taxes, European Commission Says

The decision follows a three-year investigation into Apple’s tax dealings in Europe, with the Brussels watchdog concluding that the Irish arrangements – which date back to the early 1990s – were illegal under state aid rules and gave Apple favourable treatment over other businesses.

That’s because businesses get USA tax credits for their foreign tax payments. The Commission said it treated all companies equally.

Cook states in his letter that the nature of the ruling is “unprecedented” because multinational companies’ profits should be taxed in the places where the value is generated. Cook says the ruling could lead to job losses in Europe.

Easily, given that the company’s cash hoard exceeds $200 billion. The company held $214.9 billion of that amount in foreign subsidiaries.

Vale says: “While the tax to be collected is hugely significant, this is unlikely to be made available for public expenditure purposes pending the appeal result”. He argued that Tuesday’s surprisingly “eye-watering figure” of 13 billion euros meant Ireland might be wise to cash in a chip that would allow Ireland “life-changing” levels of investment in combating poverty. They include closing tax loopholes and improving the way tax information is shared across the 28-nation EU.

For Ireland, a country of barely 4.6 million people, that sum would be a huge windfall – equivalent to over 2,800 euros ($3,150) for every man, woman and child. In government coffers, that money would easily wipe out Ireland’s 2016 deficit and put the country back in the black for the first time in a decade.

Ireland’s low corporate tax rate has been a cornerstone of economic policy for 20 years, drawing investors from multinational companies whose staff account for nearly one in 10 workers in Ireland.

Over the years, we received guidance from Irish tax authorities on how to comply correctly with Irish tax law – the same kind of guidance available to any company doing business there.

“The European Commission has launched an effort to rewrite Apple’s history in Europe, ignore Ireland’s tax laws and upend the global tax system in the process”. The company will appeal the decision.

Apple was found to be holding over $181 billion offshore, more than any U.S. company, in a study published past year by two left-leaning nonprofit groups: Citizens for Tax Justice and the U.S. Public Interest Research Group Education Fund.

“This would strike a devastating blow to the sovereignty of European Union member states over their own tax matters, and to the principle of certainty of law in Europe”. “Beyond the obvious targeting of Apple, the most profound and harmful effect of this ruling will be on investment and job creation in Europe”, Cook said.

The Revenue Commissioner chairman, Niall Cody, says the overarching problem is “mismatches between different countries’ tax rules”. “If other countries were to require Apple to pay more tax on profits of the two companies over the same period under their national taxation rules, this would reduce the amount to be recovered by Ireland”. Apple has 5,500 workers in Ireland, making it one of the biggest private-sector employers.

The EU commission for competition, Margrethe Vestager ruled that the deal between the Irish tax authorities and Apple in 1991 and 2007 contravened EU rules on state aid, which outlaw preferential treatment for individual companies. He says: “Full tax due was paid in accordance with the law”.

Ireland’s minister of finance said he would also appeal the commission’s decision as it is “necessary to defend the integrity of our tax system”.

He also claimed: “W e have become the largest taxpayer in Ireland, the largest taxpayer in the United States, and the largest taxpayer in the world”. TheIrish government said it “disagrees profoundly with the Commission’s analysis”.

“Our tax system is founded on the strict application of the law. without exception”, he said.

This decision has consequences for other companies than Apple.

Ireland’s tax policies have angered other countries in the European Union, who believe that Ireland is stealing business and siphoning off their own tax revenue.

Nonetheless, the Irish cabinet has agreed to convene on Wednesday, 31 August, to discuss and confirm plans on how they will go about appealing the E.U.’s seemingly imposed decision.