“Ireland granted illegal tax benefits to Apple, which enabled it to pay substantially less tax than other businesses over many years”, said Competition Commission Margrethe Vestager, whose crackdown on mainly United States multinationals has angered Washington which accuses Brussels of protectionism. On Tuesday the company said it expects to place “some amount of cash” in an escrow account.
Advertisement
That allowed Apple to pay just over $11 million in corporate taxes in 2011 – an effective tax rate of less than 1 percent. He says Ireland didn’t view the subsidiaries as legally Irish. He said Apple will appeal the decision.
Because the countries are small, they gain from even small amounts of tax on multinationals’ huge revenues. Apple is appealing the ruling.
Chief financial officer Luca Maestri said the suggestion that Apple paid as little as £50 for every £1m in profit was “a completely made-up number”.
It is important that we send a strong message that Ireland remains an attractive and stable location of choice for long-term substantive investment, said Irish Finance Minister Michael Noonan. He ardently expressed that Apple will continue to be, “committed to Ireland and we plan to continue investing there, growing and serving our customers with the same level of passion and commitment”.
But Cook maintained that the European Commission’s claim has no basis.
Both Apple and the Irish government said they would challenge the EU action in the European courts, and predicted it would be vindicated.
Currently, the setup allows Apple to record all its sales across the EU’s 28 nations and 500 million consumers in Ireland.
The US presidency has expressed “concern” about the European Commission’s decision, on Tuesday, that the US Company Apple is obliged to pay a tax debt of 13 billion euros, arguing that joint efforts are affected by the worldwide tax system optimization. To put matters in context, it is estimated that the Irish government spend approximately €13 billion a year on health care.
The tax repayment order – by far the largest in European Union history – follows a three-year inquiry into whether Dublin’s tax breaks for Silicon Valley titan Apple were against the law. In an earlier white paper, the US Treasury Department warned the European Union about taking any action against Apple and other US companies like Amazon and Starbucks.
“We would prefer, if there are legitimate concerns that are raised by the Europeans about the erosion of their tax base, that they actually work effectively with the United States to address those concerns collaboratively, as opposed to taking the kind of unilateral approach that could have a totally unfair impact on USA taxpayers”. In recent weeks, the Obama administration warned European officials that their investigations seemed to be unfairly singling out US companies.
The US government has also weighed into the row, previously accusing the European Commission of deliberately targeting American firms – something Brussels denies. And Ireland, which has long used low taxes to attract foreign businesses, said it will stand with Apple. Their investigation determined that Apple had paid 1% tax in 2003 and 0.005% in 2014.
Advertisement
“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”.
