Brussels set to demand years of extra tax payments from Apple
Published 29/08/2016 | 08:40
Apple is preparing to appeal an imminent order that it pay back years of unpaid taxes to the Irish state should the European Commission rule this week that Ireland gave the tech giant illegal state aid.
The European Commission is expected to declare this week that deals stretching back 25 years between Apple and the Irish state gave the company an unfair advantage. In what is by far the biggest case of its kind, Apple could be ordered to pay back billions, although the sum is expected to be significantly lower than the $19bn (£14.5bn) that has been suggested.
Apple and the Irish government are both expected to signal soon after the decision that it will be appealed. Tim Cook, the company’s chief executive, said recently that Apple will fight the ruling if the company feels it has not had “a fair hearing”, while Michael Noonan, the Irish finance minister, has said the government will appeal any negative finding.
The commission has been investigating two agreements between Apple and Ireland made in 1991 and 2007 that allow the company to route its international sales through the country to a subsidiary which is not resident in Ireland for tax purposes.
The company has built up an offshore cash pile of $215bn, with its arrangements in Ireland allowing it to pay an estimated 2pc or less on profits. Apple argues that, rather than pay corporation taxes abroad, it should do so when it chooses to repatriate the funds to the US, since this is where its products are developed.
“People really aren’t arguing that Apple should pay more taxes. They’re arguing about who they should be paid to,” Mr Cook said earlier this month.
The European Commission said two years ago it had taken the preliminary view that Apple’s arrangements in Ireland give it an unfair advantage.
The Apple case is the biggest of a number of European Commission competition investigations into alleged sweetheart deals allowing US companies to pay reduced tax rates. The commission has already ruled that the Netherlands gave Starbucks illegal state aid, a decision that is being appealed in the European courts.
Last week, the US Treasury issued an unprecedented attack on EU investigations into American companies, accusing the commission of trying to become a “supranational tax authority” and warning of a “chilling effect” on US investment in Europe.