Report: EU Orders Apple To Pay $14.5 Billion In Back Taxes To Ireland
August 30, 2016 at 11:58 AM (PT)
APPLE must pay up to $14.5 billion in back taxes to IRELAND after a EUROPEAN UNION ruling the firm was given illegal tax benefits over the last 20 years.
EU Competition Commissioner MARGRETHE VESTAGER commented: “Member states cannot give tax benefits to selected companies — this is illegal under EU state aid rules.”
The three-year investigation found IRELAND granted exorbitant tax breaks to APPLE, dropping its rate from 1% in 2003 to 0.0005% in 2014.
In a letter addressed to customers today, APPLE says the EU's decision will have "serious, wide-reaching implications."
"In Ireland and in every country where we operate, APPLE follows the law and we pay all the taxes we owe," the letter insisted.
IRISH authorities have vowed to fight the ruling, and the U.S. government has disputed the EU's position.
“IRELAND’s position remains that the full amount of tax was paid in this case and no state aid was provided,” the government said in a statement. “IRELAND does not do deals with taxpayers.”
APPLE and other major U.S. firms including GOOGLE and MICROSOFT all generate revenue not subject to U.S. corporate income tax, outside the U.S. The 10 firms with the largest holdings collectively have $724 billion in this revenue outside the U.S.
The EU has been investigating possible tax avoidance by multinational firms since JUNE 2014. Under current EU rules, member countries cannot give aid that grants companies or sectors an unfair advantage.
Similar rulings have been issued in cases involving STARBUCKS and the NETHERLANDS, as well as FIAT and AMAZON with LUXEMBOURG.
A U.S. TREASURY DEPARTMENT spokesperson said the agency is "disappointed" with the EU's ruling. "The COMMISSION’s 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."
IRELAND offers minimal regulation and significantly lower corporate tax rates (12.5% vs. 35% in the U.S.), a major reason why top U.S. tech companies — including APPLE, GOOGLE, AMAZON, FACEBOOK, YAHOO, MICROSOFT, TWITTER and eBAY house offices in IRELAND, where they employ thousands.
APPLE employs about 5,500 workers in CORK, IRELAND, where it is the largest private sector employer.