Apple Ordered to Pay $14 Billion in Europe for Dodging Taxes
The European Commission made the ruling after a three-year investigation that found Apple had only paid $55 in taxes for ever $1.12 million it made in European profits. That essentially made its tax rate 0.0005 percent for the year 2014. The usual rate for corporation tax in Ireland is 12.5%. The €13bn owed equates to roughly $14.5 billion USD.
According to the commission, Apple and Irish tax authorities entered into an illegal tax deal that was allowing Apple to pay a minimum tax rate of just 1%. The deal violated rules on state aid.
The complex agreement had Apple shifting their profits on products sold in other countries, where the tax rate is 12.5 percent. Then from Ireland profits were shifted to a “head office” not based in any country, that did not have employees or own premises, and had no economic activity, so that Apple could pay an even lower tax rate. The “remaining vast majority of profits were allocated to the “head office”, where they remained untaxed.”
European Union commissioner Margarethe Vestager stated, ““Member States cannot give tax benefits to selected companies – this is illegal under EU state aid rules. This is not a penalty, it is an unpaid tax.”
Apple CEO Tim Cook was not happy about the news, stating that it has “serious, wide-reaching implications” for other companies:
“Beyond the obvious targeting of Apple, the most profound and harmful effect of this ruling will be on investment and job creation in Europe. Using the commission’s theory, every company in Ireland and across Europe is suddenly at risk of being subjected to taxes under laws that never existed.”
The US Treasury says the ruling could damage “the important spirit of economic partnership between the US and the EU.” Both Apple and the Irish government have vowed to appeal the decision.
Standing up to Apple
By Robert Reich – September 1, 2016 – | Op-Ed
Instead of criticizing the European Commission for forcing Apple to pay up, American politicians ought to be thanking Europe for standing up to Apple.
For years, Washington lawmakers on both sides of the aisle have attacked big corporations for avoiding taxes by parking their profits overseas. Last week the European Union did something about it.
The European Union’s executive commission ordered Ireland to collect $14.5 billion in back taxes from Apple.
But rather than congratulate Europe for standing up to Apple, official Washington is outraged.
Republican House Speaker Paul Ryan calls it an “awful” decision. Democratic Senator Charles Schumer, who’s likely to become Senate Majority Leader next year, says it’s “a cheap money grab by the European Commission.” Republican Orrin Hatch, chairman of the Senate Finance Committee, accusesEurope of “targeting” American businesses. Democratic Senator Ron Wyden says it “undermines our tax treaties and paints a target on American firms in the eyes of foreign governments.”
P-l-e-a-s-e. [Read more]