The European Commission has ordered Ireland to claw back £11billion of back taxes, plus interest.
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On Thursday, Apple chief Tim Cook turned up the heat further stating his belief that the Irish government “would do the right thing”.
“They just picked a number from I don’t know where”, Mr. Cook told Ireland’s Independent newspaper.
Ireland’s fragile coalition government will try on Friday to overcome cabinet divisions on whether to join Apple in appealing against a multi-billion-euro back tax demand that the European Commission has slapped on the iPhone maker.
The Commission found that Apple paid around one per cent tax on its European profits in 2003 and just 0.005% in 2014.
Apple was found to hold over $181 billion ($238 billion Cdn) in accumulated profits offshore, more than any USA company, in a study distributed a year ago by two left -leaning nonprofit groups, a policy critics say is meant to abstain from paying US charges.
Given the US’s 35 per cent top corporate tax rate, a USA tax bill of at least $2 billion suggests that Apple plans to bring at least $5.7 billion back next year.
The investigation was launched in June 2014 and concluded that Apple has been paying lower tax since 1991 – the result of illegal tax preferences. The US tax payments are not triggered until the money is brought into the United States. This is because, Cook says, they may be “subjected to taxes under laws that never existed”.
The Irish government has made a decision to appeal against the European commission’s ruling that Apple was given a sweetheart tax deal and should hand Dublin €13bn (£11bn) in fiscal payments. And the harm is not confined to a single company: The ruling has cast a cloud of uncertainty over Europe’s corporate-tax rules, potentially affecting all multinational investors.
Apple has already said it will lodge an appeal. But what I feel strongly about is that this decision was politically based, of that I’m very confident. Trying to make sense of the competing claims isn’t helped by the fact that one side quotes a percentage, the other a dollar amount.
The timing of the dispute is not good for Apple. The company is expected to announce the next version of the iPhone and Apple Watch on September 7 in San Francisco.
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Apple computer owners shouldn’t worry.
