Apple is on the hook for 13 billion euros (around $14.5 billion in USA currency) in back taxes owed to Ireland after the European Union ruled the company had dodged its tax obligations by taking advantage of a loophole.
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Apple’s chief executive Tim Cook has claimed that the European Commission made up its claims about the business’ tax payments in Ireland. Both Ireland, which has made low corporate taxes a cornerstone of its financial policy, and Apple, one of hundreds of USA companies with operations in Ireland, have said they’ll appeal the ruling.
On Tuesday, the EC ruled that Ireland granted undue tax benefits of up to 13 billion euros (14.5 billion USA dollars) to Apple, saying that “selective treatment” allowed Apple to pay tax rate of 1 percent on European Union profits in 2003 down to 0.005 percent in 2014.
In the interview with Irish state broadcaster RTE, Cook said part of the company’s 2014 tax bill would be paid next year when the company repatriates billions of dollars of offshore profits to the United States.
“They just picked a number from I don’t know where”, he said in the interview. While the Commission wants back taxes to be paid, Mr. Cook says he wants to bring these accumulative profits back to the U.S. but not at the current high corporate tax rate of almost 40%. We were certainly one of the largest corporate taxpayers in Ireland that year, if not the largest.
He also added that Apple had provisioned “several billion dollars” from its profits in 2014 for repatriation to the US, which would then be used to fulfil the company’s tax liabilities in the country.
On Tuesday, the EC ruled that Apple would have to pay €13 billion ($14.5 billion) in back taxes to Ireland. “State aid can come in many forms, as a task benefit, as a favourable treatment of a piece of land, a favourable loan”, added the Vestager suggesting that the EU Commission is here to make sure that the Treaties are respected”. But Apple has also long suggested it wasn’t considering moving any of that money back soon-until there was corporate tax code changes in the US that would make such a move less costly. “This is a decision based on the facts of the case”. “We never asked for, nor did we receive, any special deals”.
The EU has also ordered Starbucks to pay more taxes to the Netherlands.
Ms Vestager said the commission was within its rights to pursue the state aid case as the issue concerned Europe.
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In an interview with The Irish Independent, Tim Cook used the same phrase he had in an interview on 60 Minutes in 2015. In a statement Tuesday, the Treasury Department described the Commission’s retroactive tax decisions are “unfair” and “contrary to well-established legal principles”.
