In a statement, the Department of Treasury said retroactive tax assessments by the EU Commission “are unfair, contrary to well-established legal principles and call into question the tax rules” of the individual countries in the EU.
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“We now find ourselves in the unusual position of being ordered to retroactively pay additional taxes to a government that says we don’t owe them any more than we’ve already paid”, Apple CEO Tim Cook complained in a statement. The ruling is also unrelated to access to the European single market. He accused the Commission of rewriting Apple’s history, ignoring Ireland’s tax laws and upending the worldwide tax system. European Union’s competition commissioner, Margrethe Vestager, submitted a 130-pages long ruling.
The EU’s ruling challenges the way that Ireland agreed to tax the profits of Irish-registered Apple subsidiaries, through which most of its non-U.S. profits flowed. “It’s a big shot across the pond to USA companies”.
The ruling comes at an awkward time for Apple, which is preparing to introduce its latest iPhones next week. Vestager is also probing Amazon Inc. and McDonald’s Corp’s affairs in Luxembourg and has signaled she’s willing to add Google parent Alphabet Inc.’s 130 million-pound ($184 million) tax deal with the United Kingdom to her growing list of investigations.
Both Ireland and Apple are appealing the decision.
Ireland must now recover the unpaid taxes in Ireland from Apple for the years 2003 to 2014 of up to 13 billion, plus interest.
In a statement to investors Tuesday, however, Apple said it plans to fight the decision, which is not yet final.
The company has argued that moving to a low-tax jurisdiction would reduce the high rate of foreign tax imposed on income being repatriated to Australia to pay dividends.
Talking to reporters in Wellington today, Key said New Zealand expected multinationals to pay their fair share of tax and it was part of the OECD working group to see if potential loopholes could be tightened. They also benefit from the jobs created.
How have Apple and Ireland reacted?
On Tuesday a US Treasury official would not comment specifically on the Apple case, but said Washington is disappointed that the EU Commission has acted unilaterally.
The move from the Netherlands to Ireland cost the company $US63 million, but was still considered to be worthwhile due to the favourable tax treatment. In recent weeks, the Obama administration warned European officials that their investigations seemed to be unfairly singling out USA companies.
European companies doing business in the USA are taxed according to the same principle.
“That’s really what the OECD is trying to do – to try and say ‘well collectively, can we all hold hands and make sure that those loopholes disappear'”. Hence it pays little or no tax in Australia.
Apple said the European Union ruling will have no immediate effect on its finances.
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Apple’s stock fell less than 1%.
