A senior Democratic senator said Brussels had made “a cheap money grab” for US revenues.
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Critics in Congress have denounced the move as a predatory money grab that would encroach on US government jurisdiction and ultimately add to the federal deficit.
In a statement, Apple argued that the Community tax law is complex and that in recent years the company has helped create over 1.5 million jobs in the EU.
But EU Competition Commissioner Margrethe Vestager said Ireland granted such lavish tax breaks to Apple that the company’s effective corporate tax rate on its European profits dropped from 1 percent in 2003 to a mere 0.005 percent in 2014.
After nearly three years of investigating, the European Commission has concluded that the incentives Apple enjoyed were illegal. But he said the decision may spur Congress to finally address the stalled effort to reform America’s corporate tax structure.
“It is important that we send a strong message that Ireland remains an attractive and stable location of choice for long-term substantive investment”, said Irish Finance Minister Michael Noonan.
Both Apple and Ireland deny any wrongdoing and have said they will appeal against the decision. He also believes Apple has always followed the law – and paid its taxes.
Companies including Google, Apple, Facebook, Starbucks and Pfizer are reported to have routed billions of dollars of profits to Caribbean tax havens using the Irish tax loophole, which exploits the fact that companies can be registered in Ireland but not deemed resident in the country for tax purposes. The commission’s investigation found that Ireland had “artificially reduced Apple’s tax burden for over two decades”, she said.
Cook says that Apple has been a supporter of tax reforms, but only when looking forward.
Lew said that while the Obama administration has not succeeded in getting tax reform through Congress, it has made progress on the issue and “there is a growing bipartisan consensus on how to deal with tax reform in a way that will enable us to reach overseas income”.
Information Technology Industry Council president and CEO, Dean Garfield also expressed concern over the move, saying the imposition of unforeseeable and retroactive penalties, risks chilling transatlantic commerce and investment and growth in the European Union at the expense of U.S. taxpayers. Apple said it plans to appeal the decision.
“The commission further said, “The taxable profits of Apple Sales International and Apple Operations Europe did not correspond to economic reality”.
Ireland’s regular tax rate is 12.5 percent, and the EU’s rules state that members can’t give special benefits to individual companies, even if it is the most highly valued company in the world.
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In a letter on the company’s website, Apple CEO Tim Cook said the company never asked for or received “special deals” on its taxes from Ireland. Even the US government too feels its firms are being targeted by the European Union as a US Treasury spokesperson warned the move threatens to undermine US investment in Europe and “the important spirit of economic partnership between the US and the European Union”.
