Why is the EU demanding Apple pay $14.5 billion in Irish taxes?
The EU says the deal cut between Ireland and Apple should be considered illegal state aid.
The EU says the deal cut between Ireland and Apple should be considered illegal state aid.
A European Union commission has done a record-breaking audit on Apple Inc., ordering the tech giant to pay Ireland 13 billion euros ($14.5 billion) in back taxes in a controversial ruling.聽聽
The government of Ireland denies any wrongdoing, but this is the latest in a series of revelations that suggest the nation's business-friendly tax policies聽could lend themselves too easily to tax evasion, a reputation Jason Walsh described for 海角大神 in 2013:
鈥淯.S. companies are the grandmasters of tax avoidance,鈥� Edward Kleinbard, professor at the University of Southern California and former chief of staff to the congressional Joint Committee on Taxation, told The New York Times.聽鈥淣evertheless, because of the nature of U.S. politics, [the Apple case] will be framed by the U.S. as Europe overreaching and discriminating against 鈥榦ur team.鈥� 鈥�
Ireland struck two deals with Apple in 1991 and 2007 in an effort to keep the tech giant 鈥� and the hundreds of jobs it produced 鈥� inside the country, Fortune reported. These deals essentially allowed Apple to avoid paying the country's full corporate tax rate, which was already the lowest in the EU.聽
The ruling is the latest from the EU competition commissioners who frown on the special deals giant companies can make with individual countries because they say it hurts the smaller companies who lack similar clout. The commission has found similar fault with deals between the Netherlands and聽Starbucks聽and Luxembourg and Fiat,聽Amazon聽and聽McDonald鈥檚, Fortune reported.聽
鈥淲hen a government lets a company avoid paying its share, that company gains just as if it received a handful of cash," said Competition聽Commissioner Margrethe Vestager.
Representatives of the US tech industry are incredulous, and the US Treasury Department has voiced its disapproval, Bloomberg noted.
鈥淲e believe that retroactive tax assessments by the commission are unfair, contrary to well-established legal principles, and call into question the tax rules of individual member states,鈥� the Treasury said in an email statement. 鈥淭he commission鈥檚 actions could threaten to undermine foreign investment, the business climate in Europe, and the important spirit of economic partnership between the U.S. and the EU.鈥�
Apple has already expressed confidence in an appeal.
"The European Commission has launched an effort to rewrite Apple鈥檚 history in Europe, ignore Ireland鈥檚 tax laws and upend the international tax system in the process," according to the company statement. "The Commission鈥檚 case is not about how much Apple pays in taxes, it鈥檚 about which government collects the money. It will have a profound and harmful effect on investment and job creation in Europe.鈥�
The commission is not only standing by the ruling, but also noted in the decision that other countries lost taxes because the deal allowed Apple to record nearly all its profits through Ireland, Fortune reported.
鈥淣o rules have been changed 鈥� not one rule,鈥� Ms. Vestager said at a news conference in Brussels. 鈥淭his is a question of paying unpaid taxes.鈥�
The commissioner invited other European nations to review their records with a view toward receiving a share of back-taxes.