Both Apple and the Irish authorities have stated that they will appeal the ruling to the European Court of Justice. But the decision was welcomed by groups that have long criticized the practices used by Apple and other large companies to legally reduce their tax obligations.
Advertisement
Apple’s annual report has said that “substantially all of the company’s undistributed global earnings meant to be indefinitely reinvested in operations outside the United States were generated by subsidiaries organized in Ireland, which has a statutory tax rate of 12.5 percent”.
EU Competition Commissioner Margrethe Vestager, a straight-talking Dane who dismisses talk of leading an anti-American crusade, says the hearings at the Senate Permanent Subcommittee on Investigations chaired by Levin were what gave her Spanish predecessor grounds to demand disclosure by Apple and Ireland.
“Apple was now the largest employer in the Cork area with 1,000 direct employees and 500 persons engaged on a subcontract basis. We will appeal and we are confident the decision will be overturned”.
“Beyond the obvious targeting of Apple, the most profound and harmful effect of this ruling will be on investment and job creation in Europe”. From there, the majority of Apple’s European profits were allocated to a “head office” within the company that had no physical presence or employees in any country.
“There’s a direct financial cost to the USA, as well as a concern about whether the Apple case is just the first of a number of cases to get US companies with big dollar numbers”, said Peter Barnes, who teaches law at Duke University and practices with the law firm Caplin & Drysdale.
The more immediate problem is whether global companies will even bother with Ireland in the future if they can not get the tax breaks they want-and whether that, in the long term, will reduce the total tax take in Europe.
Many technology multinationals do exploit differences between countries’ tax laws and route billions of dollars of profit to tax havens.
“This is necessary to defend the integrity of our tax system, to provide tax certainty to business and to challenge the encroachment of European Union state aid rules into the sovereign member state competence of taxation”, Noonan said in a statement. The EU concluded that based on what other companies paid, Apple should have paid an extra $14.5 billion for the period between 2003 to 2014. “Member States can not give tax benefits to selected companies”. The U.S. Treasury called the ruling “unfair, contrary to well-established legal principles”.
The Obama administration has repeatedly objected to these investigations, saying they unfairly targeted American companies.
According to the EU, Ireland gave Apple preferential tax treatment, allowing the American company to avoid taxes other businesses would have to pay. USA lawmakers and regulators have lamented the practice but have had little success in pressing the corporations to bring the money home.
Apple’s official statement on the European Union ruling against its Irish tax arrangements tells you all you need to know about what is at stake: You can have taxes or you can have jobs, but Apple is in no mood to deliver both. The profits have often been routed through low-tax European countries, potentially cheating others nations in which the companies operate, they argue.
Advertisement
In Washington, U.S. officials also voiced their disappointment in the decision. Apple stock declined by less than 1 percent Tuesday. Wall Street analysts agreed, noting the potential tax bill is a small fraction of the company’s cash stockpile.
