“The Commission’s investigation has shown that the tax rulings issued by Ireland endorsed an artificial internal allocation of profits within Apple Sales International and Apple Operations Europe, which has no factual or economic justification”, said the EU’s press release.
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Irish Minister for Finance Michael Noonan echoed Cook’s vow to appeal the commission’s decision.
The massive sum, 40 times bigger than the previous known demand by the European Commission to a company in such a case, could be reduced, the EU executive said in a statement, if other countries sought more tax themselves from the USA tech giant.
Some opposition Irish lawmakers have urged Dublin to collect whatever tax the Commission orders it to.
The United States fired back immediately, saying retroactive tax assessments by the European Union were unfair. Irish officials expect European Union to rule the tax arrangement with the California technology company unlawful under state aid rules. The country also charges 25% corporation tax on income accruing from rent or investment.
The government maintains that even if it were to take the cash, European rules mean it would have to use the money to pay down some of its 180 billion euros of national debt rather than fund spending.
Apple employs 5,500 workers, or about a quarter of its European-based staff in the Irish city of Cork, where it is the largest private sector employer.
In 2013, the Senate panel called Apple Chief Executive Tim Cook to a high-profile hearing in which he insisted the company’s tax arrangements were legal and fair.
The ruling is likely to be appealed by both the Cupertino tech giant and Ireland.
Outside of North and South America, these two companies hold the rights to Apple’s intellectual property, which allow them to manufacture and sell the company’s products around the world, according to the EC. The report found that Ireland gave Apple special tax breaks starting in 1991, and the company paid an effective tax rate of only 1 percent in Ireland in 2003 and.005 percent in 2014.
European Commissioner Margrethe Vestager gestures during a news conference on Ireland’s tax dealings with Apple Inc at the European Commission in Brussels, Belgium August 30, 2016. On one hand the European Commission has a duty to pursue what it believes as tax evasion, and on the other tech giants, any giants, provide all the money and jobs. The same principle applies to every other country and by asking Apple to pay taxes that even Ireland says it doesn’t owe them, the EU Commission “has launched an effort to rewrite Apple’s history in Europe, ignore Ireland’s tax laws and upend the global tax system in the process”.
Both companies and countries have appealed those decisions. The Commission said it treated all companies equally. Apple’s stock is down less than 1% in mid-day trading on Tuesday. “It will have a profound and harmful effect on investment and job creation in Europe”. Our tax system is founded on the strict application of the law. without exception.
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On Tuesday a US Treasury official would not comment specifically on the Apple case, but said Washington is disappointed that the EU Commission has acted unilaterally. Whereas Ireland taxes only a multinational company’s profits on sales within Ireland – a country of barely 4.6 million and representing a tiny fraction of those companies’ global business – the United States often seeks to recoup tax on a US -headquartered company’s profits worldwide.
