When it opened the Apple investigation in 2014, the Commission told the Irish government that tax rulings it agreed in 1991 and 2007 with the iPhone maker amounted to state aid and might have broken European Union laws. Apple paid an effective tax rate of 1% on its European profits in 2003 and as little as 0.005% in 2014, according to a report to clients from Credit Suisse to clients co-authored by analyst Kulbinder Garcha.
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The White House said on Tuesday it was concerned about a European Commission order for Apple Inc APPL.O to pay billions in unpaid taxes to Ireland because it seemed TO undermine joint U.S. -EU progress on creating a more fair global tax system.
In a statement Tuesday, Treasury did not comment specifically on the Apple allegations but said US officials were “disappointed that the commission is acting unilaterally”.
Apple employs 5,500, or about a quarter of its Europe-based staff, in the Irish city of Cork, where it is the largest private sector employer.
When it opened the Apple investigation in 2014, the Commission told the Irish government that tax rulings it agreed in 1991 and 2007 with the company amounted to state aid and might have broken European Union laws. We now find ourselves in the unusual position of being ordered to retroactively pay additional taxes to a government that says we don’t owe them any more than we’ve already paid. The Commission has opened tax probes into Apple in Ireland, Starbucks in the Netherlands and Amazon in Luxemburg. “The Commission’s approach undermines USA tax treaties and worldwide transfer pricing guidelines already accepted broadly in the global tax community”.
And yet the country’s government said it would appeal the decision, arguing it had granted no favorable treatment to Apple.
But the Apple case is set to dwarf those by the virtue of the company’s huge turnover. The department in a statement Tuesday the the Commission’s decision “could threaten foreign investment, the business climate in Europe, and the important spirit of economic partnership between the US and European Union”.
Perhaps, this is a bit of a head scratcher for some: Ireland doesn’t want back taxes from Apple.
Apple contends that it abided by Ireland’s tax rules but never did the company contend that it won’t abide by such rules unless the same rules were extended to other companies to abide by principles of fair competition.
The response follows a white paper and summarizing blog post from the U.S. Treasury last week, which sharply criticized the European Commission and rulings of this nature. “It will have a profound and harmful effect on investment and job creation in Europe”. This is a question of unpaid taxes and that is a completely different thing.
Ireland’s Finance Minister Michael Noonan and Apple chief executive Tim Cook vowed to fight the verdict.
How much tax does the commission say Apple paid? The European Union’s executive branch rejected Thursday, Aug. 25, 2016 the US government’s complaint that its probes into sweetheart tax deals between EU governments and big companies are hitting USA firms hardest.
Whatever the result, it will impact any company (tech or other) that holds foreign subsidiaries, in their business operations and growth prospects.
“I have no doubt this will cause significant reputational damage to the country and that is why the government must appeal this decision”, Irish MEP Hayes told national broadcaster RTE.
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But opposition politicians urged Ireland, which has suffered years of austerity following a painful recession during the eurozone, to take the Silicon Valley giant’s cash.
