Apple’s tax situation in Europe is currently the subject of an E.U. investigation — and public opinion hasn’t been helped too much by Google recently agreeing to pay what many view as a derisory sum of £130 million ($185m) in U.K. back taxes for the past ten years.
But Cupertino has an unexpected champion in the form of tousle-haired London mayor (and possible next Prime Minister) Boris Johnson. Kind of.
Over the weekend, Johnson wrote an article for the U.K.’s Telegraph newspaper, entitled “We All Want Apple to Pay More Tax.”
With a headline like that, it’s slightly surprising that Johnson then dedicates a large part of the ensuing article to defending Apple’s tax practices — saying that Apple isn’t actually doing anything wrong, and haranguing the “crop-haired … Left-wing” competition directorate in the European Commission, Margrethe Vestager, who he describes as being, “straight out of that Scandi-noir serial Borgen.”
Johnson writes that:
“A part of me that sides strongly with Tim Cook and Apple – or at least can see his point of view. It is absurd to blame the company for ‘not paying their taxes’. You might as well blame a shark for eating seals. It is the nature of the beast; and not only is it the nature of the beast – it is the law. It is the fiduciary duty of their finance directors to minimise tax exposure. They have a legal obligation to their shareholders.
Tax is not paid on the basis of what ‘feels right’ either to public opinion or to politicians. It is not some eleemosynary contribution. It is not as if we are all in church, and watching beadily to make sure that Tim Cook puts his £50 note into the collection basket. Tax is paid, and must be paid, in accordance with the strict requirements of the system.”
He then goes on to attach the “crusading Danish commissioner” for taking issue with Apple’s Irish tax affairs, which he argues has nothing to do with the E.U. at all.
“The paradox of this whole case is that the Irish and Apple are on the same side. If Margrethe the Commissioner makes Apple give Dublin $16 billion in back taxes, that will actually be against the wishes of the Irish government.
The Irish decided they wanted to go for an ultra-low corporation tax, at 12.5 per cent. It was their sovereign ambition to attract the HQ of Apple and others. They wanted Irish taxi drivers to have the honour of ferrying Apple executives around, and they wanted Irish waitresses to snaffle their huge tips. The EU Commission is partly excited by the chance to bash a corporate American giant; but mainly it is a chance to attack tax arbitrage between member states – to move ever closer towards uniformity and away from a spirit of healthy competition between jurisdictions.”
As anyone who follows U.K. and European politics will know, there’s more to this story than just Apple — but it’s still one of the better pieces I’ve seen written about this topic. I have yet to read an impassioned defense of the idea that corporations like Apple and Google should pay such a tiny fraction of the tax that other businesses do, simply because they’re structured as multinationals with the clout to agree super-favorable terms.
With that said, criticizing Apple for taking advantage of legal loopholes wreaks of either a) lack of understanding of how companies and tax laws work, or b) lazy journalism looking to cram Apple into the headline as an easy villain.
Do you agree or disagree with Boris Johnson’s take on the Apple tax deal? Leave your comments below.
Source: Telegraph
Luke Dormehl is a U.K.-based journalist and author, with a background working in documentary film for Channel 4 and the BBC. He is the author of The Apple Revolution and The Formula: How Algorithms Solve All Our Problems … and Create More, both published by Penguin/Random House. His tech writing has also appeared in Wired, Fast Company, Techmeme and other publications.
4 responses to “London’s mayor defends Apple’s tax practices in E.U.”
couldn’t agree more , tax is payed as demanded, very few people pay more tax than is necessary so why not same with companies. Hopefully they will use some of that money to good causes. like fighting the anti encryption laws from ill informed goverments
It’s true that companies have a responsibility towards their shareholders to minimize their exposure to taxation. But Johnson is conflating this obvious principle with the fact that the EU is investigating the legality of Apple’s tax arrangements in Ireland.
Companies also have a responsibility to comply with local laws in the jurisdictions they operate.
EU commissioners are no more entitled to arbitrarily decide how much tax “feels right” than anyone else. The question they are investigating is whether the tax arrangement is legal.
Johnson is right. Most stock in large multi-nationals is owned by institutional investors like pension funds, retirement accounts, and sovereign wealth funds. Companies have an obligation to find ways to create the best value for their shareholders. Government’s using different incentives – including taxes – is nothing new. Liberia now is “home” to a large percentage of cargo ships. China has built entire infrastructures to get companies to move/build. Ireland has used tax policy. Your premise that multiple nationals get “super-favorable terms” isn’t a fair reflection of what happens: governments negotiate cost-effectively. If it takes $US200,000 to negotiate a deal for each company, you want that money to bring the best possible benefit to the taxpayers/citizens. One deal that brings 10,000 jobs is a lot better than 5 deals that bring 2,000 jobs each because of the costs involved. That is like saying a manufacturer should give the same price to a customer who buys one widget vs. a million widgets.
*reeks (penultimate paragraph).