Tim Cook has written an open letter addressing Apple’s enormous tax bill, arguing that the European Union’s demand for €13 billion ($14.52 billion) in unpaid back taxes will have a “profound and harmful effect” on “investment and job creation in Europe.”
At present, Apple employs close to 6,000 people in Ireland, as well as “sustaining” 1.5 million jobs across Europe — including those at Apple and other manufacturers, developers and suppliers who rely on it.
You can read Tim Cook’s letter in full here. He addresses Apple’s choice to open offices in Ireland back in 1980, writing that:
“At the time, Cork was suffering from high unemployment and extremely low economic investment. But Apple’s leaders saw a community rich with talent, and one they believed could accommodate growth if the company was fortunate enough to succeed.”
He also states, in no uncertain terms, that suggestions Apple has an illegal sweetheart deal in Ireland, “has no basis in fact or in law,” confirms Apple will appeal the European Commission’s ruling, and suggests that, “We are confident that the Commission’s order will be reversed.”
But Cook argues that the the targeting of Apple is less about any right or wrongdoing the company has undertaken, and more about the EC’s attempts to overrule the Irish government, which has already said it is happy with its tax arrangement with Apple.
“At its root, the Commission’s case is not about how much Apple pays in taxes,” Cook writes. “It is about which government collects the money.”
Earlier today, the European Commission ordered that Apple pay the largest ever tax bill in European history — based on the accusation that it takes advantage of illegal state aid in Ireland.
Ireland’s finance ministry has sided with Apple, and said it “disagrees profoundly” with the decision.
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.”
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.
12 responses to “Tim Cook: Apple’s tax bill will have a ‘harmful’ effect on investment in EU”
And paying 0.005% of tax on ALL European sales are not harmful ? This is supposed to help our economies ? The couple of thousands of jobs created in Ireland are supposed to compensate the fact that the biggest corportation in the world gets away with paying 0.005% of tax for their sales in ALL 28 European states ?
The fact that Cork was suffering high unemployment rates at that time does not give you the right to screw all of EU. Thanks to the EU you can sell your products in all 28 countries without paying fees, customs, imports etc. and yet you think it is right that all other 27 countries get absolutely nothing from your operations there and Ireland only gets 0.005% ? What the hell is wrong with you Tim ?
You lost my respect for Apple. I doubt I will ever buy an Apple product again… just please stop this whole caring, environment loving company bullshit – because you have just proven that it is in fact bullshit.
A genuine question: how much tax do you think Apple should have to pay and who should decide the rate? If you’re of the opinion that the Irish government’s suggested tax rates are to be ignored, should Apple just have to guess a fair tax rate, or does the European Commission itself get to decide? And if it’s the latter, why isn’t that position enshrined in EU law and why is the Irish government under the mistaken impression that it has sovereign control over its own tax laws?
1. The rate is and had been decided by the Irish Government. It is 12.5%. It can be 1% or 50% – EC has no say over it. What they do have a say in, however, is that this rate applies to all for reasons listed below.
2. EC doesn’t decide anything on Ireland’s behalf.
3. State-aid law which prevents member states of the EU from effectively bribing companies to settle in their countries clearly states that corporate tax of each country has to be applied to all – and cannot be selective.
4. Ireland agreed to that.
5. Ireland took advantage of the single market, allowing Apple to channell all of it’s earnings from that single market to Ireland – but they failed to comply by that single market’s rules. That’s why and what for they are being punished. Not the amount – if Ireland wants to charge 1% of tax – they can. But they must apply that rule to all companies equally – that’s what they agreed to and that’s what the European Parliament – including Irish PMs has drafted.
To sum up – Ireland broke EU’s law by taking advantage of the single market but not respecting their part of the deal. EC is not punishing Ireland or Apple – they simply state that the deal was illegal and has to be corrected.
The only thing that really disgusts me in this is Apple’s stance and how arrogant they have become.
Let me rephrase one thing:
Based on the single market agreement, all 28 countries agreed to drop customs, import fees etc. in return they all agreed to play by the rules.
Apple operates in 28 of those countries but moves all of its profits to Ireland, effectively not paying ANY tax in any of those countries.
This is allowed based on the rule that all member states will tax each company equally.
Ireland broke this rule and allowed Apple to pay less than 1% of tax on all of their European sales, effectively robbing other 27 countries of the tax that should otherwise be paid.
This is why EC is ordering Ireland to claim back those taxes – mosty because it’s against the rules to which Ireland agreed and because it’s harmful for every other state in which Apple operates and doesn’t pay any taxes at all.
Right. I think Apple, MIcrosoft, Facebook and Google all “move” the profit made in Norway to Irland. The effective tax in Norway for those companies are just change.
Thanks for your detailed replies. But you seem to confirm – as Tim Cook says – that Apple hasn’t done anything illegal and that it is Ireland who have (allegedly) broken EU laws. When you say that “they are being punished”, who are you referring to? If it is Apple, what are they being punished for? If it is the Irish government, how are they being punished?
Tim, if you’re not going to pay any tax, then what difference does it make if you’re going to invest here or not ? Sorry but the mere couple of thousands jobs are not worth you sucking money out of all of Europe without paying almost any taxes…
Timmy is being a whiny little b*tch. I don’t blame him for writing an open letter as an effort (a weak, whiny effort) to get off the hook…but it is cowardly to threaten the future of jobs, R&D, etc., in Europe. Pay your fair share and stop being such a weasel. You have been raping and pillaging them for long enough. And come out with a new MacBook Pro already, ya dingus. WTF are you waiting for???
LOL raping and pillaging is now what companies or people whom make governments responsible for the use of the money that we give them. WOW. You must live in the dream world of TAX and SPEND SOCIALISTIC NUT JOB CULT. Please explain to me why sending your money or the taking of corporate money by a government entity is better that spending it on your own. The idiocy of that type of thinking is why governments rape and pillage the people that they govern. So MR SIZZLE please explain your wacked out theory.
I love Apple but reading their defence to this is total bollocks; it’s a kind of reply I’d expect of the Koch brothers and not something from Tim Cook… for shame!
Even though it’s a huge amount it’s pretty insignificant when you consider Aplle’s close to trillion dollar worth.
Pay it Apple and show the world you’re above corporate greed!!
LOL…why is success in business always relegated to CORPORATE greed!!! Give me a break. I believe it was Switzerland citizens that recently turned down minimum wage. $25 per hour was on the ballot. Government is always a waste of money and feeds on the NEED to rape the corporations and its citizens of its hard earned dollar. If you MEDIA LUSH is willing to part your hard earned money and give it to whatever government you wish please DO SO!
I think that Mr Cook is talking a load of BS. The Irish Govt and Apple, broke the law. There are plenty of European news feeds regarding this matter and are worth reading. He is only appealing this because he doesn’t want to look guilty and is possibly hoping for a settlement number. FYI the European block, bailed out the Irish Gov to the tune of 80 billion back in 2009, so it is a rather funny tune that the Irish are whistling up regarding how the European’s are interfering in their domestic matters.