Two tax rulings granted by Ireland have artificially reduced Apple’s tax burden for over two decades in breach of European Union state aid rules.
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Finally, the Commission added that while Ireland is expected to recover the tax, it may not get the whole 13 billion: if any other country is found to have made similar illegal state aid offers they may also be forced to claw back some of this overall amount.
“I have the feeling that if my objective tax rate were 0.05% falling to 0.005%, maybe I should have had a second look at my tax bill”.
“The amount that will go into an escrow account – and will be potentially subject to appeal depending on a government decision and depending on all the claims that might emerge from the USA or other European Union countries at the instigation or prompting of Commissioner Vestager – could be at that figure at max”, he said.
While Apple aficionados are waiting with bated breath for the iPhone 7 launch on September 7, CEO Tim Cook will be more anxious about the European Commission’s (EC).5 billion tax order.
“The opinion issued on August 30 alleges that Ireland gave Apple a special deal on our taxes”.
An era where governments – who have long enabled and assisted multinationals with special deals that allow them to legally pay less taxes – are now changing tune and battling each other about which nation has the right to tax.
A ruling that Apple should pay €13 billion in back taxes to Ireland has renewed scrutiny of the tech company’s tax arrangements in New Zealand.
Other critics in Washington warned that Tuesday’s European Commission move would encroach on US government jurisdiction and ultimately add to the federal deficit. British ministers said the European Commission’s decision could represent a significant “opportunity” for Britain as it seeks to attract business after leaving the EU.
“The most profound and harmful effect of this ruling will be on investment and job creation in Europe”, Mr Cook warned.
“I disagree profoundly with the Commission’s decision”.
Ireland’s Cabinet will meet Wednesday to confirm plans to appeal the judgment.
He said overturning the cash award would be essential “to defend the integrity of our tax system, provide tax certainty to business, and. send a strong message that Ireland remains an attractive and stable location of choice for long-term substantive investment”.
As a result of the allocation method endorsed in the tax rulings, Apple only paid an effective corporate tax rate that declined from 1% in 2003 to 0.005% in 2014 on the profits of Apple Sales International.
Vale says the EU order will require the Irish tax collection agency to issue a demand soon for payment, and any money handed over by Apple would be placed in a hands-off escrow account pending years of litigation before the European Court of Justice in Luxembourg.
Ireland’s low corporate tax rate has been a cornerstone of economic policy for 20 years, drawing investors from multinational companies whose staff account for nearly one in 10 workers in Ireland.
The EC has been investigating the voracity of multinational tax avoidance schemes that it says illegaly shifts profits made in the European Union into tax havens overseas.
“However, the two companies concerned were not resident companies in Ireland for tax purposes”.
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Members of both parties in Congress pointed to the stunning decision as evidence that the USA tax code should be rewritten to give American companies an incentive to bring home some $2.1 trillion in US corporate profits held overseas.
