Even bringing Apple’s sizable cash pile back to the U.S. wouldn’t stop the E.U. from investigating the company’s Irish tax arrangements, claims E.U. competition commissioner Margrethe Vestager.
“Whether or not Apple wants to repatriate part of their un-repatriated profits is purely up to Apple and is of no concern [to] our case work,” she told reporters after a recent meeting in the U.S. with the Obama administration.
As the Financial Times reports:
“Apple’s accounts show that it has earmarked about half of its overseas cash for repatriation to the US. In October’s annual report, Apple estimated a deferred tax liability of $30bn related to a cumulative total of $91.5bn in foreign earnings. As a result, Apple’s advocates in Washington argue that European governments have no rights to those funds.”
Margrethe Vestager has recently been attacked by U.S. Treasury secretary Jack Lew for singling out American companies for its crusade against alleged tax dodgers. It seems that the fresh meetings in the United States did nothing to settle these points, either. “I think it’s very much the same,” Vestager said.
Vestager admits she has no idea how much Apple could owe if it is found to have benefitted from an unfair tax arrangement with Ireland. “I have no magic numbers,” Vestager said. “The case is not done yet and therefore it is still very early days because only when we finalise our investigation will we know.”
As well as Jack Lew, the E.U. competition commissioner has previously been criticized by the U.K.’s mayor of London Boris Johnson. In an article on Apple’s tax avoidance, Johnson described Vestager as a, “crop-haired … Left-wing [figure] … straight out of that Scandi-noir serial Borgen,” who is fixated on U.S. multinationals.
Apple has always been insistent that it pays all the tax that it owes. During last year’s “Inside Apple” episode of 60 Minutes, Tim Cook labelled reports that Apple doesn’t pay its taxes as, “total political crap.” In the same interview he also railed against the idea of U.S. tax codes built for the industrial age instead of the digital age.
“It would cost me 40% to bring [Apple’s overseas cash pile] home, and I don’t think that’s a reasonable thing to do,” Cook argued.
Apple’s Chief Financial Officer Luca Maestri has also said that, “if there is a fair outcome of the [European Commission] investigation, [Apple should pay] zero” extra tax.
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.
One response to “Even moving Apple’s cash pile home won’t halt E.U. tax investigation”
This is what politicians do. They see a pile of potential money they can grab for “taxes”, then spread rumors that somehow the individual or company is “dodging” or “not paying their fair share” or some similar inflammatory accusation. Then there’s an “investigation” which really means “let’s figure out some kind of method, or pass some new law, or reinterpret some old law, so we can snag some of that delicious cash for ourselves”. If Apple had violated tax laws, it would be a simple matter of stating specifically which law(s) were violated and on what date, and demand payment.
The US is losing out on taxes in the first place by not making it financially attractive for Apple to bring its foreign-earned money back to the US. Remember that Apple has already paid sales taxes to the countries in which the products were sold. Governments get greedy, and instead of making it financially supportive of business, they go into a frenzy of how to force companies to fork over greater and greater amounts of cash. The reason why Ireland is home to a large amount of Apple’s overseas cash is that Ireland knows that by charging a smaller tax rate, it saves Apple money and makes Ireland more revenue. Apple’s accountants, like accountants around the world, are always trying to find ways to reduce their tax burden. It’s why we hire ’em.