The European commission’s decision that Apple owes Ireland €13bn (£11bn) in unpaid taxes has been branded “fundamentally unfair” by its former competition commissioner, Neelie Kroes.
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But in Ireland itself, the government and public opinion are divided over whether to take the windfall – which would fund the country’s health system for a year – or reject it in the hope of maintaining a low tax regime that has attracted many multinationals, creating jobs.
He added, he was “very confident” the ruling would be overturned on appeal.
USA -based companies are taxed at a 35 percent corporate rate on their global profits but they get tax credits for payments to foreign governments and they don’t pay the US tax until they bring the money home. Under U.S. tax law, Apple’s Irish profits are taxable if brought back to the United States, but any tax paid in Europe is reduced from the tax due in the United States.
Following an in-depth state aid investigation launched in mid-2014, the rulings endorsed a way to establish the taxable profits for two Irish incorporated companies of the Apple group (Apple Sales International and Apple Operations Europe), which did not correspond to economic reality.
Responding to Cook’s comments, European Union competition chief Margrethe Vestager called on Apple and Ireland to allow the release of the details of the confidential ruling.
“We’ve got a long term romance together”, says Cook. “In fact, the tax treatment in Ireland enabled Apple to avoid taxation on nearly all profits generated by sales of Apple products in the entire EU Single Market”.
Cook added, he would “love” to see the Irish government appeal against the commission’s ruling to pay 13 billion in back tax to the Irish government.
Vestager has said she will meet US Treasury Secretary Jack Lew in Washington in September to further discuss the Apple case.
“Ireland and Apple have acted not only in the law, but did what was right”.
Apple’s worldwide reserves have been particularly divisive as they remain out of reach of American tax authorities. “They just picked a number from I don’t know where”, he said. EU Competition Commissioner Margrethe Vestager said the arrangement allowed Apple to pay a tax rate of 0.005 percent.
He was particularly upset at the EU’s demand for retroactive tax payments.
“Apple has always been about doing the right thing, never the easy thing”.
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Apple holds almost $215 billion in cash and securities outside the USA, much of that generated by its Irish subsidiaries. “I have been concerned that it reflected an attempt to reach into the USA tax base to tax income that ought to be taxed in the United States”, he said on Wednesday.
