However, an investigation instigated by the EU’s European Commission may present Apple with a hefty back tax-bill, which an analysis by Bloomberg Intelligence suggests could be as high as $8bn.
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Apple could be facing a very large tax bill in Europe after an investigation of its tax policies by the European Commission (EC). A decision in the probe is expected in Brussels by March, possibly after the 2016 Irish election.
The European Commission contends that Apple’s corporate arrangement in Ireland allows it to calculate profits using more favourable accounting methods.
If the Company’s effective tax rates were to increase, particularly in the USA or Ireland, or if the ultimate determination of the Company’s taxes owed is for an amount in excess of amounts previously accrued, the Company’s financial condition, operating results and cash flows could be adversely affected. Bloomberg Intelligence analyst Matt Larson examined Apple’s financial records to estimate the company’s potential tax liability if the investigators rule against it. Starbucks Corp., Amazon.com Inc. and McDonalds Corp. have also had its tax policies questioned.
Tough to pinpoint the exact companies that will be impacted given disclosure, but we provide a couple of quick steps investors can use to find companies that HOLT identifies with the most risk.
Chief executive Tim Cook says Apple pays its fair share of taxes.
“Going back in time to penalize taxpayers under a new law, or a new interpretation of an existing law without notice, runs counter to that objective”.
Apple’s tax practices are also under scrutiny by the Internal Revenue Service in the United States.
Based on Bloomberg’s analysis, Apple today produces close to 55% of its revenues ex-U.S., and its overall foreign tax rate is only around 1.8%.
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“That’s total political crap, there is no truth behind it”, Mr Cook said back in December 2015. He told U.S. television news show 60 Minutes that the tax system globally is outdated and need to be updated to take account of the digital economy. Ricardo Cardoso, a European Commission spokesman, declined to comment.
