Apple Pays, or not?

After a three-year investigation, the European commission has found Apple’s “sweetheart” tax agreement with Ireland to be illegal and concluded Apple will have to pay back £13billion in taxes. Apple were judged to be paying a corporation tax of less than 1%, far lower than Ireland’s generous 12.5% standard corporation tax. Commissioner Margrethe Vestager, head of competition policy, said “Member states can not give benefits to selected companies – this is illegal under EU state law. The commission’s investigation concluded that Ireland granted illegal tax benefits to Apple, which enabled it to pay substantially less tax than other business over many years”

“In fact, this selective treatment allowed Apple to an effective corporation tax of 1 percent on its European profits in 2003 and down to 0.005 per cent in 2014.”

Apple have indicated they will challenge the decision and accusing the European Commission of “an effort to rewrite Apple’s history in Europe” and “upend the international tax system”.

The Statement continued, “The commissions case is not about how much Apple pays in taxes, it’s about which government collects the money. It will have a profound and harmful effect on investment and job creation in Europe.”

“Apple follows the laws and pays all the taxes we owe wherever we operate. We will appeal and confident the decision will be overturned.” Irelands first finance minister Michael Noonan said “I profoundly disagree with the commission’s decision. Our tax system is founded on a strict application of the law”. Mr Noonan has gained cabinet approval to appeal the decision before European courts. 

The tax agreement between Ireland and Apple was first drawn up in 1991 when Apple were suffering from the PC boom and then negotiated again in 2007 which enabled the company to pay considerably less tax on profits over the last 10 years.

 

Photo via flickr, courtesy of Steve Rhodes

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Reuters: Business News

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