European Union member countries are allowed to set their own tax rates and Ireland’s low corporate rate of 12.5 percent has helped it attract US multinationals, particularly tech and pharmaceutical giants, including Google, Facebook and Twitter.
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The European Commission this week ruled that Apple must pay €13bn in back taxes to Ireland for revenues booked through operations based in Ireland. Now a junior minister in government, he said that while Apple should have paid more tax, it’s arrangements weren’t illegal.
“But what I feel strongly about is that this decision was politically based, of that I’m very confident”, he said.
He pledged to continue the company’s investments in its long-established corporate base in Cork in the south of Ireland, and will work with the Irish government, which also opposes the ruling, to appeal against the decision.
“We have concluded that Ireland granted undue tax benefits of up to 13 billion euros to Apple”.
At the heart of the ruling, Apple improperly routed taxable income to its Irish subsidiary with no accountable head office.
But Cook released a letter to customers on the company’s website yesterday, in which he said the claim that Ireland gave Apple a “special deal” on taxes had “no basis in fact or law”. Taxes for multinational companies are complex, yet a fundamental principle is recognized around the world: A company’s profits should be taxed in the country where the value is created.
Apple says it paid $400 million in taxes in Ireland in 2014, and another $400 million to the U.S. “We paid $400m in taxes to Ireland in 2014… that is one out of every $15 in taxes that were paid in the entire country”, he insisted.
Lew said that he saw Europe’s effort as “an attempt to reach in to the USA tax base to tax income that ought to be taxed by the United States”. “We believe we’re the largest taxpayer there”.
Members will have to reach a decision on whether to pursue the unpaid tax and risk the wrath of multinational companies, which the Irish economy depends heavily upon, or to fight the European Union ruling.
Meanwhile, Cook said in a radio interview on Thursday that Apple expects to repatriate billions of dollars of global profits to the United States next year.
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Ireland’s cabinet members are now deliberating whether or not they should follow Noonan’s advice to appeal the Commission’s ruling. We view the team there as world-class.
