“Apple follows the law and we pay all the taxes we owe”, Apple CEO Tim Cook said in a letter to customers, adding that the decision was “unprecedented” and would “strike a devastating blow to the sovereignty of European Union member states over their own tax matters”.
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Ireland’s finance minister Michael Noonan said he disagreed “profoundly” with the decision and would seek Cabinet approval for an appeal.
No. The Commission’s case against Ireland was helped by its ability to secure access to documents in which Irish officials were unusually frank about the agreement they made with Apple.
“It’s not a good economic development strategy for Ireland in the long run, and it also subverts the tax system of every other member nation and nations around world”, he added.
“The Commission’s case is not about how much Apple pays in taxes, it’s about which government collects the money”.
The deal would have allowed Apple to pay a maximum of 1% in taxes, versus the usual rate for corporations of 12.5%.
As a result, in 2011 Apple Sales International recorded $22 billion in profits but was only taxed in Ireland on $50 million, the Commission said, citing figures from US Senate hearings. And yet the government said it will appeal the decision, arguing it granted no special treatment to Apple.
The European Union’s executive branch has found that Ireland granted unfair and illegal tax breaks to the tech giant Apple, and ruled that Apple now owes more than $14.5 billion in back taxes.
Concluding a two-year investigation, the EU’s antitrust regulator said Ireland granted Apple tax benefits that amounted to “state aid” and enabled it to pay substantially less tax than other businesses between 2003 and 2014.
The Irish government insisted that Apple had paid its full amount of tax and no state aid was provided.
He said the commission was trying to override Ireland’s tax law, and infringing on its sovereignty in the process.
Apple’s CEO Tim Cook has since fired back at the ruling by saying, “Beyond the obvious targeting of Apple, the most profound and harmful effect of this ruling will be on investment and job creation in Europe”.
“The European Commission has launched an effort to rewrite Apple’s history in Europe, ignore Ireland’s tax laws and upend the worldwide tax system in the process”, the company said.
The EU’s campaign against tax avoidance is meant to create a fairer society by having companies contribute taxes to the countries they operate in.
Either way, the EU’s bold move risks fueling tensions with the USA, which complains that it is singling out American companies.
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What does the USA government think? The world’s largest economies have agreed to work together to fight the erosion of the tax base through corporate offshoring of profits, and USA lawmakers have labored for years, unsuccessfully thus far, to craft a bipartisan tax overhaul. Any money will be placed in a hands-off escrow account pending what could be years of litigation before the European Court of Justice in Luxembourg, he said.
