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Apple Must Repay $14.5 Billion in Back Taxes, EU Commission Rules
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I said Ireland broke the EU law on state aid and Apple willingly went along with it, of course you can attempt to claim a giant corporation with more lawyers then most country's have didn't know what was going on if you wish, all whilst feeding billions through a shell corporate headquarters whose sole purpose is to avoid paying taxes.
You know, if things don't feel right.... don't do it.
0.005% - 1.0% Tax can never feel right.
I'm sure when Ireland proposed such a deal to Apple, someone at Apple must have felt it...
It's just common sense that this would backfire.
0.005% - 1.0% Tax can never feel right.
I'm sure when Ireland proposed such a deal to Apple, someone at Apple must have felt it...
It's just common sense that this would backfire.
Favorable to some corporations because there are a lot of Irish companies that do not get the sweet deal Apple gets.
My thoughts exactly. However, the only question remains if Apple was smart enough to know that in one day this would blow on their collective faces and requested quarantines from Ireland so they wouldn't have to pay the normal corporate tax even if it was required by EU.
I get all that. We all get that. Ireland's international tax code looks unfair. What I don't get is where Apple broke the law.
Apple signed up to a deal that its lawyers must have known was in breach of EU trade regulations. It cannot in all seriousness claim that it was acting in good faith.
If someone offers to rent you an apartment for $1 a month, you should know something is wrong.
Likewise, being offered less than 1% in taxes instead of the normal Irish 12.5% rate, should let you know that you're being given illegal state aid. (Or in Apple's case, it's far more likely that they offered to open some Irish "offices" in return for a better deal... just like they've done in India and China.)
Heck, for that matter, I don't know what Apple is complaining about, since even 12.5% is a low rate. I'd love to get that kind of deal for my own income taxes!!
Except they do pay the 12.5%. They weren't offered a lower rate. That's just the effective when you add in profits that are attributed to the U.S. corporation but are not taxed by the U.S. until they are repatriated. Essentially, profits left in the double irish limbo.
The EU doesn't want them to allow so much of the profits to be attributed to the U.S. which is very disingenuous considering all the value from those profits was generated in the U.S.
So many people think this is somehow legal because it was arranged by the government
Maybe putting it like this will help you understand:
Imagine if one of the states of the USA negotiated with a large company to make a law that their employees no longer had the protection of the constitution or bill of rights, and so could be enslaved, saving that company a lot of money
Would you say that was legal because it was authorised by the state? No, because there is a higher (federal) legal authority that says you cannot actually do that
That's what has happened here, and Ireland can appeal all they want but they won't win
Maybe putting it like this will help you understand:
Imagine if one of the states of the USA negotiated with a large company to make a law that their employees no longer had the protection of the constitution or bill of rights, and so could be enslaved, saving that company a lot of money
Would you say that was legal because it was authorised by the state? No, because there is a higher (federal) legal authority that says you cannot actually do that
That's what has happened here, and Ireland can appeal all they want but they won't win
Interesting times in Ireland:
http://www.irishtimes.com/opinion/convincing-voters-to-forgo-apple-s-13bn-will-not-be-easy-1.2773489
http://www.irishtimes.com/opinion/convincing-voters-to-forgo-apple-s-13bn-will-not-be-easy-1.2773489
What are you talking about?!? Are you gathering this "information" from thin air or did it come out of your digestive system?
Facts:
"two tax rulings issued by Ireland to Apple have substantially and artificially lowered the tax paid by Apple in Ireland since 1991. The rulings endorsed a way to establish the taxable profits for two Irish incorporated companies of the Apple group (Apple Sales International and Apple Operations Europe), which did not correspond to economic reality: almost all sales profits recorded by the two companies were internally attributed to a "head office". The Commission's assessment showed that these "head offices" existed only on paper and could not have generated such profits. These profits allocated to the "head offices" were not subject to tax in any country under specific provisions of the Irish tax law, which are no longer in force. As a result of the allocation method endorsed in the tax rulings, Apple only paid an effective corporate tax rate that declined from 1% in 2003 to 0.005% in 2014 on the profits of Apple Sales International.
This selective tax treatment of Apple in Ireland is illegal under EU state aid rules, because it gives Apple a significant advantage over other businesses that are subject to the same national taxation rules. The Commission can order recovery of illegal state aid for a ten-year period preceding the Commission's first request for information in 2013. Ireland must now recover the unpaid taxes in Ireland from Apple for the years 2003 to 2014 of up to €13 billion, plus interest.
In fact, the tax treatment in Ireland enabled Apple to avoid taxation on almost all profits generated by sales of Apple products in the entire EU Single Market."
source:
http://europa.eu/rapid/press-release_IP-16-2923_en.htm
It always amazes me how many people cry foul when something like this happens despite the fact they have very little understanding of what has actually happened or the legal and financial processes involved. They seize on figures spouted by the media and instantly become part of the angry mob.
I certainly don't claim to be an expert but I do own and run a UK corporation, albeit a very small one, and I have to rely on the judgement of accountants and tax lawyers and ultimately the guidance of HMRC (UK tax authority) to determine what tax I owe for a declared set of business activities. Sometimes it seems lenient, sometimes it seems punitive and for the most part you've got to trust advice given and then enjoy the ups while surviving the downs. What never seems possible in my experience is to be certain of anything. There are so many grey areas in tax and corporate law that you can never be 100% sure that you are doing or have done the right thing. The best you can hope for is to make an honest mistake and avoid any claims of negligence or dishonesty.
Getting back to the Apple/Ireland vs EU case, here Apple paid all the taxes which the government of the Ireland demanded based on declared business activities. Apple have done nothing wrong. Period. Furthermore, I noted a comment made today where Apple said that this ruling will have no effect on their financial situation because they have already accrued US taxes on the profits involved. What this means is that they expected to be taxed by the US on this profit rather than by the Irish government. The only difference is that they can defer that US tax payment until they actually repatriate that cash.
Currently the repatriation tax level in the US is laughably high (35%) so Apple are keeping the cash in limbo until common sense prevails in the US and the repatriation tax rate is reduced to a sensible level (10-15%). So from my (limited) understanding, if they are forced to pay 12.5% corp tax in Ireland then that will still be a heck of a lot cheaper than paying 35% in the US today and probably not much different to the level Apple were expecting to pay when they repatriated the cash to the US.
As Apple said in their statement, this is not a matter of paying tax or not paying tax, it's a matter of "when" and to which government. They argue that they are a US company and the "value" of their products is generated in the US ("Designed by Apple in California") and therefore the taxation should be mostly incurred there. That doesn't seem unreasonable to me.
I certainly don't claim to be an expert but I do own and run a UK corporation, albeit a very small one, and I have to rely on the judgement of accountants and tax lawyers and ultimately the guidance of HMRC (UK tax authority) to determine what tax I owe for a declared set of business activities. Sometimes it seems lenient, sometimes it seems punitive and for the most part you've got to trust advice given and then enjoy the ups while surviving the downs. What never seems possible in my experience is to be certain of anything. There are so many grey areas in tax and corporate law that you can never be 100% sure that you are doing or have done the right thing. The best you can hope for is to make an honest mistake and avoid any claims of negligence or dishonesty.
Getting back to the Apple/Ireland vs EU case, here Apple paid all the taxes which the government of the Ireland demanded based on declared business activities. Apple have done nothing wrong. Period. Furthermore, I noted a comment made today where Apple said that this ruling will have no effect on their financial situation because they have already accrued US taxes on the profits involved. What this means is that they expected to be taxed by the US on this profit rather than by the Irish government. The only difference is that they can defer that US tax payment until they actually repatriate that cash.
Currently the repatriation tax level in the US is laughably high (35%) so Apple are keeping the cash in limbo until common sense prevails in the US and the repatriation tax rate is reduced to a sensible level (10-15%). So from my (limited) understanding, if they are forced to pay 12.5% corp tax in Ireland then that will still be a heck of a lot cheaper than paying 35% in the US today and probably not much different to the level Apple were expecting to pay when they repatriated the cash to the US.
As Apple said in their statement, this is not a matter of paying tax or not paying tax, it's a matter of "when" and to which government. They argue that they are a US company and the "value" of their products is generated in the US ("Designed by Apple in California") and therefore the taxation should be mostly incurred there. That doesn't seem unreasonable to me.
So this explains why Tim cashed in a bunch of stock, all makes sense now!
That doesn't answer my question on how many are actually working in the HQ office and not the call center they have in it.
Most employees seem to be working as CS representatives for questions from european customers:
http://uk.businessinsider.com/apple...ok-at-the-slideshow-below-to-find-out-more-34
No, Tim's RSU's matured after 5 years of successfully leading Apple and he cashed some in. https://techparse.co.uk/2016/08/26/...apple-stock-after-receiving-5-year-rsu-bonus/
Bear this in mind too: http://www.cnet.com/news/apples-tim-cook-plans-to-donate-his-wealth-to-charity/
The Commission thinks otherwise. Apple might've skirted the edge of the laws legally, but they certainly knew they were going against their legal intent.
At the same time, I'm suspicious of EU rulings that result in big payouts. This kind of investigation should've been done back at the beginning, and when the EU didn't need money.
I believe that yes, Apple has always accounted for US taxes as if they had actually paid them. But they haven't yet, so that money is still in their "offshore" banks.
Reports say that repatriation would probably end up at an effective rate below 20%.
Btw, if you're wonder why the US Congress hasn't agreed to a tax holiday, it's because they were talked into one years ago, using the same whinging pleas companies like Apple use today. Guess what happened? Most of that money did not go back into their businesses, and in fact many companies laid off more people.
So, Congress is once burned, twice wary.
Here's a good read from Information Week: Apple, Taxes, And Why Tim Cook Is Wrong
One of the interesting notes in there is that Apple claimed quite the opposite when they created their Irish subsidiaries to hide from taxes. The whole reason why their scheme works is because they claim that all the costly IP is based in Ireland.
The sad thing is that other companies saw what Apple had done, and followed in their footsteps.
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As far as I am aware, the commission are demanding that the Irish tax authority demand money from Apple, they have not "charged" Apple with anything. I don't think you are in a position to comment on Apple's intentions, that's just speculation.
Yes, I agree the EU is on a cash-grab here, while the EU still exists.
Apple accruing taxes is no different to what I do as a company owner. For example, my 2015 corp tax is assessed after 2015 year end but is payable 9-10 months later. If I pay that tax early I get something like 0.5% interest from HMRC but if I pay late then I have to pay interest back. In my case I choose to pay early and claim interest from HMRC but I'm sure a company like Apple can get better returns by keeping their cash and paying any resulting interest charges.
I'm aware of the last time repatriation tax was relaxed and unfortunately there are still dogmatic people in the world. Personally I would tend to learn from any mistakes made and try to find a better solution this time around instead of dismissing the idea out of hand.
Apple have had employees in Cork since 1980 or so and currently employ 6000 or so. This is a very different situation from some companies who are simply using Ireland or Holland to evade tax.
I know, I know... anybody who doesn't bash Apple on a daily basis owns some of their stock. Well, I have never owned Apple stock, do not currently own Apple stock, and never plan on owning any Apple stock.
That said, I understand where you're coming from. Break the law, pay the price. If there is any legal documentation showing that corporations agreeing to "illegal" deals with EU members will be punished, then yes, Apple should be punished along with Ireland.
As others have said, Ireland agreed to the EU's anti-business policies, so they should pay the price. Any country that voluntarily surrenders their sovereignty and ability to govern their country as they see fit deserves this kind of thing.
If Ireland began doing this in (2003?) and all these big (intellectual property-heavy) companies have been taking advantage of it, how is it that the EU didn't notice and fix the problem 10 years ago? That is the part I don't understand. People keep suggesting that Ireland was operating in secret-- how is it possible that the EU didn't figure out why companies like Apple were operating in Ireland as they did?
If you want to stop spending money... cut the farm subsidies, cut the military spending in half... and stop wasting money trying to dictate what people do with their bodies and we'll be able to balance a budget. Additionally, we should make it easy for money to flow into the US.
What kind of an awful money hungry world do we live in when people try to argue against a company that makes over a 1,500 dollars every second in profit from paying their fair share?
I wonder what it will take to wake people up. Regardless of the legality it is just morally wrong.
I wonder what it will take to wake people up. Regardless of the legality it is just morally wrong.