EU says Apple must pay up to 13B euros in back taxes

EU says Apple must pay up to 13B euros in back taxes

EU says Apple must pay up to 13B euros in back taxes

Ireland is in big trouble with the European Commission (EC) over tax breaks that it gave Apple to lure the tech giant to set up shop in the country. But Apple insisted it was "subject to the same tax laws as scores of other worldwide companies doing business in Ireland".

Earnest says it's important for the USA and Europe to work collaboratively on the goal of preventing the unfair erosion of the tax base rather than taking a unilateral approach. Cook says the ruling could lead to job losses in Europe.

"I disagree profoundly with the Commission's decision", Irish Finance Minister Michael Noonan said in a statement.

In a hard-hitting defence of its tax planning and corporate structure, Apple warned of the ramifications for future investment in Europe, where it employs 22,000 people.

Over the past four years the commission has been looking at similar generous tax deals handed out to multinationals, questioning whether they too amount to unlawful state aid. A statement from the ministry said Ireland plans to appeal the decision but is legally obliged to recover the money from Apple in the interim.

Peter Vale, a Dublin-based corporate tax expert for the accounting firm Grant Thornton, calculated that Tuesday's decision, if upheld, could ultimately cost Apple 19 billion euros ($21 billion) because the European Union order also includes interest for unpaid taxes going back more than a decade. A year ago the country spent around 48.5 billion euros - some 13 billion euros of that on health care, the same sum as Tuesday's tax order - and recorded a deficit below 5 billion euros. This was a key part of the chain through which Apple has now built up a cash pile of over $200 billion held outside the US - if the money is returned to the US, Apple would be subject to US tax on it.

The final ruling, delivered on Tuesday, follows a three-year probe into Apple's Irish tax affairs.

Elsewhere, Apple dismissed suggestions that it will have to pay six billion euro (£5.12 billion) interest on top of the 13 billion euro tax bill, while it suggested the legal challenge to the case will take several years.

Like the Irish government, the company vowed to appeal and overturn the order. It will have a profound and harmful effect on investment and job creation in Europe. It is effectively proposing to replace Irish tax laws with a view of what the Commission thinks the law should have been. The Commission said it treated all companies equally. This way Apple recorded all sales and associated profits in Ireland.

It said this was because Apple recorded all its sales in Ireland rather than in the countries where the products were sold.

It found only a small percentage of Apple Sales International's profits were taxed in Ireland and the rest was not taxed anywhere. He says: "Full tax due was paid in accordance with the law".

The inquiry found that Ireland's treatment of Apple allowed the global brand to avoid taxation on nearly all profits generated by sales of Apple products in the entire European single market. Tax rulings from Luxembourg and the Netherlands - granted to Fiat and Starbucks respectively - have already been found unlawful. "The decision leaves me with no choice but to seek Cabinet approval to appeal the decision before the European courts".

The tax payment is the highest ever demanded under the EU's longstanding state-aid rules that forbid companies from gaining advantages over its competitors because of government help.

That internal company practice, as well as two favorable Irish tax rulings in 1991 and 2007, "enabled Apple to avoid taxation on nearly all profits generated by the sale of Apple products in the entire EU single market", which now encompasses 28 nations and more than 500 million consumers, according to the European Commission. And while the Irish tax system has changed in recent years, the decision will create some uncertainty about the tax structure on offer to inward investors, even if the Government will loudly argue that this is not the case.

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