Preliminary findings by the European Commission have slammed Apple and Ireland for a so-called “sweetheart” tax deal which allowed Apple to avoid paying taxes by building up a massive offshore cash pile of $137.7bn in the country.
The deal dates back to 1991, and allowed Ireland to provide Apple with illegal state aid. Apple has had a base in the country since 1980.
In a statement, the European Commission said that “the Irish authorities confer an advantage on Apple,” and that this “advantage is obtained every year and ongoing.”
Apple could be made to repay unpaid tax in the EU. Photo: The Daily Show
Regulators are set to break down the reason tax deals given to Apple in Ireland violate EU laws, according to people familiar with the matter.
The European Commission began formal investigations into the tax avoidance issue back in June, and plans to publish its findings as early as today — with the claim that tax deals between Apple and the Irish government could fall under the heading of illegal state aid.
While Apple has yet to make a comment on the matter, the Irish government has spoken up; describing its position as “confident” that the Apple deal represents “no breach of state-aid rules.” It claims that it has already submitted a formal response to the European Commission, in which it addresses in detail “the concerns and some misunderstandings.”
Apple has a massive pile of cash sitting overseas and the U.S. Senate is now weighing options on how to entice Cupertino to bring all $138 billion of it back to American soil.
Senate Democrats and Republicans are reportedly in discussions about passing legislation that would give American companies like Apple and Google a one-time tax break if they repatriate profits stashed overseas.
Apple paid just 3.7% tax on its non-U.S. income last year — and the European Commission isn’t happy about it.
Registering its overseas business in Ireland, Apple is one of three companies being investigated for abusive transfer pricing and other forms of corporate profit shifting, with the other two being Starbucks and Fiat Finance and Trade.
The subject of corporate tax avoidance has become an increasingly hot-button issue in recent years, as the result of probes into international businesses like Apple and Google, which use convoluted structures as a means of slashing their tax bills.
Following a change to VAT (value added tax) legislation in the United Kingdom, there have been a lot of reports suggesting that Apple customers in the U.K. may soon have to pay more when buying from iTunes and the App Store.
As it turns out, those reports are likely incorrect.
You see, Apple has been charging Brits 23% VAT on digital content until now — but the U.K. VAT rate is only 20%.
An Irish parliamentary committee has dismissed the opportunity to grill Apple and Google over their tax affairs in Ireland, despite requests for a change to the way in which it taxes large multinationals that do business in its country.
The move comes weeks after Apple and Google came under scrutiny for the way in which they use tax “loopholes” or “gimmicks” to avoid paying excessive taxes on international sales. It was revealed that Apple used an Irish subsidiary with zero employees to pay less than 0.05% tax on $78 billion over four years.
Apple has received a lot of heat from the U.S. Senate lately regarding its international tax practices and off-shore cash, and you can now add Apple co-founder Steve Wozniak to the list of Apple tax dissenters.
Woz said that he doesn’t think Apple’s tax practices are really fair, and suggested that Apple, and other large firms, be taxed on their income.
In an interview with the BBC, Woz had the following to say regarding Apple’s tax practices:
We’ve already brought you some of the most interesting topics that came up during Tim Cook’s interview at D11 last night, but if you’d like to watch the entire thing yourself, you can do so right now. AllThingsD has posted the entire thing — which runs for one hour and 20 minutes — online this morning, and you can watch it below.
Tim Cook survived his grilling during his appearance before the U.S. Senate Sub-Committee Hearing to Examine Offshore Profit Shifting and Tax Avoidance by Apple Inc. Even though some of the senators still aren’t happy with Apple’s international tax practices, a solution to the problem wasn’t given.
Not one to pass up the opportunity to make fun of senators, John Stewart broke down the Senate hearing on his show last night and jokingly proposed the U.S. create the ‘Tax Code Nano.’ The entire bit is pretty hilarious, you can watch it below:
Apple CEO Tim Cook and CFO Peter Oppenheimer are in Washington D.C. this morning to talk to a Senate subcommittee about Apple’s off-shore cash hoard. The Apple execs are expected to face a lot of heat surrounding Apple’s Irish subsidiary, through which Apple has funneled 64% of its earnings without paying any tax, yet has zero employees.
Before the hearing got underway though, Ireland’s deputy prime minister, Eamon Gilmore, issued a public statement which claimed Ireland isn’t to blame for Apple’s low tax bill, even though the country has become a tax haven for multinationals since the 1960s.