Tuesday 27 September 2016

Apple boss Tim Cook says jobs and investment at risk over tax ruling

Published 30/08/2016 | 11:11

An Apple iPhone beside a tax return form as the tech giant faces a huge tax bill following an EU probe into its 'sweetheart deal' with the Irish Government
An Apple iPhone beside a tax return form as the tech giant faces a huge tax bill following an EU probe into its 'sweetheart deal' with the Irish Government

The boss of Apple has warned that the European Commission has put jobs and investment at risk after ordering the tech giant to pay 13 billion euro (£11.1 billion) in unpaid tax in Ireland.

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Chief executive Tim Cook accused competition chiefs in Brussels of targeting his global brand with laws that did not exist and simultaneously putting every business on the continent at risk.

The tech guru launched the broadside after Competition Commissioner Margrethe Vestager's landmark ruling into the iPad and iPhone maker's tax affairs found it paid just 1% tax on its European profits in 2003 and 0.005% in 2014.

Two years ago that worked out at 50 euro on every million in profit, she said.

Mr Cook dismissed the three-year investigation and went direct to his customer base with a message on apple.com and a vow to fight the order in what will likely be years of courtroom battles.

He also claimed: "W e have become the largest taxpayer in Ireland, the largest taxpayer in the United States, and the largest taxpayer in the world.

"In Ireland and in every country where we operate, Apple follows the law and we pay all the taxes we owe."

Ireland's Department of Finance is expected to lead the legal challenge to the Commissioner's record findings and tax bill.

Finance Minister Michael Noonan's response was a charm offensive on satellite channels devoted to money markets and a warning that Ireland does not do "deals" with taxpayers.

"Our tax system is founded on the strict application of the law ... without exception," he said.

Mr Noonan added that it was necessary to fight the verdict in the courts "to defend the integrity of our tax system, to provide tax certainty to business, and to challenge the encroachment of EU state aid rules into the sovereign member state competence of taxation".

The unprecedented ruling from Brussels found officials in Dublin gave assurances to Apple in 1991 and 2007 that it was abiding by law in the manner it structured its affairs, recorded profits and made payments to its California offices.

The Commissioner said the treatment of Apple amounted to illegal state aid.

The inquiry found that Ireland's treatment of Apple allowed the global brand to avoid taxation on almost all profits generated by sales in the entire European single market.

It said this was because Apple recorded all its sales in Ireland rather than in the countries where the products were sold.

The company has had a base in Ireland since 1980 and now employs 6,000 people.

Mr Cook said he was committed to the presence but warned that the "most profound and harmful effect" of the watchdog's ruling will be on jobs and investment in Europe.

The case is one of the most high-profile in the fight to redraw boundaries on aggressive tax avoidance, an issue which has put the EU at odds with the US government - an irony given that it was a Senate committee in Washington that first heard Apple was paying as little as 2% tax on its profits.

Ms Vestager found the two tax rulings issued by Ireland on the use of two Irish incorporated companies of the Apple group - Apple Sales International and Apple Operations Europe - did not reflect economic reality.

The commissioner said almost all sales profits recorded by them were internally attributed to a "head office" which only existed on paper and could not have generated such profits.

Her inquiry found the profits were not subject to tax anywhere.

Ms Vestager dismissed threatened court challenges from Apple and the Irish Government, saying she had a "very concrete case".

Elsewhere, Apple dismissed suggestions that it will have to pay six billion euro (£5.12 billion) interest on top of the 13 billion euro tax bill, while it suggested the legal challenge to the case will take several years.

Press Association

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