Ireland Agrees to Appeal European Commission's Apple Tax Ruling

[cube]

As far as I'm aware Quebec has been able to give preferential tax treatment to companies they are luring in, similar to how states in the US do.

That is not the point.

 

[draugminaion]

From Apple's latest 10-Q p29, explaining why, with the statutory rate being 35%, how come Apple paid only 25.5%.

Provision for income taxes and effective tax rates for the three- and nine-month periods ended June 25, 2016 and June 27, 2015 were as follows (dollars in millions):​

Three Months Ended
June 25, 2016
Provision for income taxes $ 2,673
Effective tax rate 25.5%​

The Company’s effective tax rates during the third quarter of 2016 and 2015 differ from the statutory federal income tax rate of 35% due primarily to certain undistributed foreign earnings, a substantial portion of which was generated by subsidiaries organized in Ireland, for which no U.S. taxes are provided when such earnings are intended to be indefinitely reinvested outside the U.S.
​

I read this as saying that they actually paid 25.5%.
26% was last year.

I'd say that the notion that the 26% tax rate is fiction seems to be fictional.

 

[weckart]

I do believe you're making that up. As I understand it, the official rate is 35%, they pay less because they don't bring all profits home. So, the 26% is what was actually paid. Feel free to show me I'm wrong.

That 26% figure includes all profits and assumes a US tax rate on profits to be repatriated - except Apple is sitting on $200bn+ in the Cayman Islands. Something that hasn't escaped plenty of commentators, including the BBC's business editor (the BBC has often been accused of being pro Apple by its detractors). I quote:

It was a skilful and very nuanced performance, but one which obscured a few key truths.
He claimed that Apple paid tax at a rate of 26% around the world, that isn't the whole story.
Apple works out its tax rate as if it had paid taxes due in the US at a rate of 35%.
But the actual payment of those taxes is deferred - till when, nobody knows.
Maybe until US taxes come down or some special tax amnesty is agreed to repatriate hundreds of billions that Apple and others keep off US shores in the tax equivalent of outer space.
In fact, the scramble to avoid paying tax at 35% is the reason the whole structure exists in the first place.

Tim Cook flatly denied that Apple had any kind of sweetheart deal - anyone else could have parked money in Ireland untaxed for years if they had just asked he said.
That is a bit like saying any pub team could win the FA Cup - in theory they can, but without the Pogbas and Ibrahimovices of the tax lawyer world, they can't.

A provision is just a line in the balance sheet. That can easily be reversed.

 

[nebo1ss]

a) It's not a penalty. EU is asking for taxes that Apple has not paid. Unless you're one of those types who thinks every tax is a penalty.
b) Apple was not following a tax law, but a tax ruling.

"The taxable profits of Apple Sales International and Apple Operations Europe in Ireland are determined by a tax ruling granted by Ireland in 1991, which in 2007 was replaced by a similar second tax ruling. This tax ruling was terminated when Apple Sales International and Apple Operations Europe changed their structures in 2015."

"The two tax rulings issued by Ireland concerned the internal allocation of these profits within Apple Sales International (rather than the wider set-up of Apple's sales operations in Europe). Specifically, they endorsed a split of the profits for tax purposes in Ireland: Under the agreed method, most profits were internally allocated away from Ireland to a "head office" within Apple Sales International. This "head office" was not based in any country and did not have any employees or own premises. Its activities consisted solely of occasional board meetings. Only a fraction of the profits of Apple Sales International were allocated to its Irish branch and subject to tax in Ireland. The remaining vast majority of profits were allocated to the "head office", where they remained untaxed."

I really suggest you look into this matter more.

Exactly.

 

[spacemanspifff]

If Apple wants to carry on 'avoiding' taxes it just needs to hold out until the U.K. leaves the EU. When/if that actually happens, the whole union will collapse and they can then carry on as before.

By the way, to those people who think the Irish thing is just a shell to move money, they do employ quite a lot of people in Ireland as that is where they build the iMac.

That said, I think they should have to pay their taxes going forward.

 

[draugminaion]

That 26% figure includes all profits and assumes a US tax rate on profits to be repatriated - except Apple is sitting on $200bn+ in the Cayman Islands. Something that hasn't escaped plenty of commentators, including the BBC's business editor (the BBC has often been accused of being pro Apple by its detractors). I quote:



A provision is just a line in the balance sheet. That can easily be reversed.

It seems to me that if the figure would include all profits, including those that could be repatriated, the figure should be 35%.
BBC pro Apple? In a parallel universe maybe.

And this is perjury then?

• [Apple] does not hold money on a Caribbean island; and it does not have a bank account in the Cayman Islands.

http://www.apple.com/pr/pdf/Apple_Testimony_to_PSI.pdf

 

[weckart]

I'd say that the notion that the 26% tax rate is fiction seems to be fictional.

Some further comment for your consideration. This time from the Guardian. Tim's sort of newspaper.

The commission said billions of income had been allowed to pass through Apple’s Irish-registered companies untaxed. Both Apple and Ireland have insisted they will appeal against the decision. Meanwhile, some politicians in the US have described it as a political attack.
Until now, Cook had consistently said Apple would not repatriate profits to the US until Washington slashed the US tax rate.
Last December, in an interview for US television programme 60 Minutes, Cook said he would “love to” repatriate Apple’s offshore cash. Asked why he doesn’t, he said: “Because it would cost me 40% to bring it home. And I don’t think that’s a reasonable thing to do.”
He then attacked the US corporate tax regime, saying: “This is a tax code made for the industrial age, not the digital age. It’s backwards, it’s awful for America. It should have been fixed many years ago. It is past time to get it done.”
In its annual report, Apple does make large provisions for US taxes, which allows it to claim that it has an effective tax rate of 26% – much higher than many other tech firms.
However, behind these accounting provisions Apple has made clear it does not intend to repatriate funds and actually pay the taxes provisioned for while the US maintains its current high tax rate. For that reason, the group’s reported tax rate is regarded by experts as an accounting fiction.
The US has a federal tax rate of 35% on corporate profits – one of the highest in the world– on top of which businesses can end up paying an additional sum of about 5% in local state taxes.
In reality, loopholes in the US tax code allow American multinationals to aggressively defer tax payments so long as any income earned outside the US is kept offshore. That allows many companies, particularly tech firms, to achieve some of the lowest effective tax rates in the world.

I do have some sympathy with Cook, here. The US tax rate seems particularly onerous, particularly with the double taxation on overseas profits after the tax authority in the resident country has taken its cut but that is the US all over. Even its expats still have to file with the IRS annually however long they have spent out of the country.

By comparison, these are the headline corporation tax rates in the EU



Even once heavily taxed Sweden is asking just over half of what the US now demands. Having said that, these are headline rates and the effective rate depends on tax deductibles.
[doublepost=1472935993][/doublepost]

It seems to me that if the figure would include all profits, including those that could be repatriated, the figure should be 35%.
BBC pro Apple? In a parallel universe maybe.

Perhaps you should have read the readers comments after Apple's keynotes in the past. 35% would be the absolute max if there were no deductibles, except if Apple happened to pay tax in any market where the corporation tax rate exceeded that of the US. Can't think of one offhand.

 

[draugminaion]

Some further comment for your consideration. This time from the Guardian. Tim's sort of newspaper.



I do have some sympathy with Cook, here. The US tax rate seems particularly onerous, particularly with the double taxation on overseas profits after the tax authority in the resident country has taken its cut but that is the US all over. Even its expats still have to file with the IRS annually however long they have spent out of the country.

By comparison, these are the headline corporation tax rates in the EU

View attachment 648188

Even once heavily taxed Sweden is asking just over half of what the US now demands. Having said that, these are headline rates and the effective rate depends on tax deductibles.
[doublepost=1472935993][/doublepost]

Perhaps you should have read the readers comments after Apple's keynotes in the past. 35% would be the absolute max if there were no deductibles, except if Apple happened to pay tax in any market where the corporation tax rate exceeded that of the US. Can't think of one offhand.

This does nothing to establish the 26% as fiction. And Apple has given testimony explicitly stating they don't have money in a Cayman bank. What's up with that?

 

[weckart]

This does nothing to establish the 26% as fiction.

Explain your reasoning after taking into account that:

a) Apple has not actually paid anything like 26% tax on its profits
b) Cook has stated publicly several times that he has no intention of paying the US tax on those billions squirrelled away.

I have made a provision on my own credit card and am now the proud effective owner of 6 Lamborghinis, 5 Bentleys, half of Singapore and an iPad Mini. This is all true.

 

[sudo1996]

It's not a retroactive tax law, it's a correction for a practice that gives Apple an unfair advantage over other companies. If you were to start a business, would you be OK with your competition not having to pay taxes whilst you do?

Apple was always paying the legal tax rate before. They're trying to change the rate now and tax Apple for previous profits. That makes it a retroactive tax law. I'm fairly certain this sort of practice is illegal in the U.S., and for good reasons.

How fair it was is irrelevant. Apple wasn't breaking any laws. Yes, I say they should change the tax rate to be equal for all corporations there, but it's too late to collect past taxes.

 

[apolloa]

Honestly, I would like to see Apple fight it out to the very end.

I really can't see the EU winning on this one. Their entire lawsuit is based on the premise that "Yeah, we know the laws work like this, but we feel they should have worked like that instead. So let's pretend the law has always been the other way from the start."

On the other hand, I am also interested in seeing just how powerful Apple has become. We are now at a point where there is nothing Microsoft and Google can do to threaten me as an Apple product user. Apple has moved on to a juncture where its opponents are the FBI and the US government. Would Apple be able to prevail against the EU as well?

It will be interesting to watch.

You clearly have not comprehended EU law and legislation, how it works, how the EU competition Commision works, and how both Apple and Ireland do NOT have a chance of wining any appeal.

 

[SHNXX]

Sovereignty is kind of a good thing, isn't it?

 

[weckart]

Apple was always paying the legal tax rate before. They're trying to change the rate now and tax Apple for previous profits. That makes it a retroactive tax law. I'm fairly certain this sort of practice is illegal in the U.S., and for good reasons.

How fair it was is irrelevant. Apple wasn't breaking any laws. Yes, I say they should change the tax rate to be equal for all corporations there, but it's too late to collect past taxes.

Apple broke EU regulations on state aid. Ireland cannot approve tax avoidance schemes that circumvent these regulations already in place before Ireland joined the EU. It was never legal in the first place and the EU has caught up with it. Ireland closed this loophole in 2015. If it were legal and above board, why did Ireland stop approving it? Retroactive tax law my foot.

Ireland's legal rate is 12.5% not 0.05%. Try paying the IRS 0.05% instead of 35% and see what happens.

 

[k995]

Sovereignty is kind of a good thing, isn't it?

Depends on how you look at it, irish gov has some secret deal with apple that gives close to nothing to ireland and probably costs them several hundred million exrta to the EU (as the GDP went up when apple did this) .

I do think a lot of irish will be happy the EU did this.

 

[Abazigal]

You clearly have not comprehended EU law and legislation, how it works, how the EU competition Commision works, and how both Apple and Ireland do NOT have a chance of wining any appeal.

I think I do actually. I have been following this case on other forums and my understanding is that the EU's case is on shakier ground than many of us realise.

If this were China, where the ruling communist party is an unabashed dictatorship, then yeah, their word would be law.

But in an organisation like the EU governed by law? There has been no illegal tax deal or dodging dealing as far as Apple is involved here.

Each EU member is able to establish their own tax laws and collect the funds as they wish. What the EU does have is a commission that regulates anti-competitive practices.

Apple did not break the law in Ireland. They paid the taxes they were supposed to pay (whether we think those tax laws are "fair" does not mean following them makes one a criminal). The EU has decided that Ireland’s tax laws give them an unfair business advatage over other EU countries. How that is Apple’s fault or their problem is beyond me.

If the EU thinks Ireland’s tax codes are anti-competitive then force Ireland to revise those laws. But asking for "back taxes" from tax codes that did not actually exist for the last ten years is absurd.

Continue to fight, Apple. Continue to fight and continue to win. We will have our answer in time.

 

[r3m1]

A special casing that's been going on for decades with multiple corporations under Irelands support that relates to the tax rate Apple pays. Who's to say what the EU will take issue with next, toilet paper rolled under or over?

Either way if this ruling stands Ireland will be losing thousands of current jobs and thousands of potential jobs.

Sure, all this mongering done by Cook only makes the situation worse - now it seems that Apple will just bleed Ireland and leave - a great addition for their social responsibility paragraph - btw, Ireland also receives billions in EU support to develop the nation, infrastructure, industries, etc. all of which Apple also benefits from

 

[sudo1996]

Apple broke EU regulations on state aid. Ireland cannot approve tax avoidance schemes that circumvent these regulations already in place before Ireland joined the EU. It was never legal in the first place and the EU has caught up with it. Ireland closed this loophole in 2015. If it were legal and above board, why did Ireland stop approving it? Retroactive tax law my foot.

Ireland's legal rate is 12.5% not 0.05%. Try paying the IRS 0.05% instead of 35% and see what happens.

I don't know why Ireland stopped approving it; could've just been because they wanted to collect more taxes. If it's true that Ireland gave Apple illegal aid, that's between Ireland and the EU. Apple was presented with a tax rate and obeyed it.

 

[draugminaion]

Explain your reasoning after taking into account that:

a) Apple has not actually paid anything like 26% tax on its profits

Where was this demonstrated? If not taxes paid / profits earned, what is this figure?

b) Cook has stated publicly several times that he has no intention of paying the US tax on those billions squirrelled away.

Show me. I've never seen where he states that. I have seen him state several times they would gladly pay a rate more reasonable than 40%. Your own quote from the Guardian has Cook stating he would "love to" repatriate the cash. He has also recently hinted that this will be happening next year.

Why should I take into account the very things that are in doubt?

I have made a provision on my own credit card and am now the proud effective owner of 6 Lamborghinis, 5 Bentleys, half of Singapore and an iPad Mini. This is all true.

Does Singapore collect property tax? Or are effective owners exempt? Or just the proud owners maybe?
Or does Singapore's English dictionary have an extra entry for the meaning of the word "effective" that I'm not aware of?

And did apple lie about Cayman banks?

 

[Mailia]

If it's true that Ireland gave Apple illegal aid, that's between Ireland and the EU.

Why are you excluding Apple out of this, when the case is specifically about Apple receiving illegal state aid? They're the ones that have gotten an uncompetitive advantage and owe taxes.

 

[draugminaion]

Apple broke EU regulations on state aid.

No. Ireland broke EU regulations on state aid. Or more correctly, the European competition commission is of the opinion that Ireland broke EU regulations on state aid. Ireland, Apple, a previous competition commissioner, and the US have a different opinion. When you are so sloppy with the easy stuff, is it wise to trust you on the hard stuff, I wonder.

 

[weckart]

Where was this demonstrated? If not taxes paid / profits earned, what is this figure?Show me. I've never seen where he states that. I have seen him state several times they would gladly pay a rate more reasonable than 40%. Your own quote from the Guardian has Cook stating he would "love to" repatriate the cash. He has also recently hinted that this will be happening next year.

Why should I take into account the very things that are in doubt?
Does Singapore collect property tax? Or are effective owners exempt? Or just the proud owners maybe?
Or does Singapore's English dictionary have an extra entry for the meaning of the word "effective" that I'm not aware of?

And did apple lie about Cayman banks?

What on earth are you quibbling about now? Either Apple has paid its taxes or it hasn't. Right now it hasn't paid taxes on $214bn of cash stowed away but placed a line in its accounts as if it had paid the US tax on it. A provision isn't even an IOU.

You admit that you have witnessed the 60 Minutes interview where Cook said he would not repatriate the money until Apple got a more favourable rate. Here it is again in print. How much more blatant can you get than this?

Cook added that "when we bring it back, we will pay 35 percent federal tax and then a weighted average across the states that we're in, which is about 5 percent, so think of it as 40 percent. We've said at 40 percent, we're not going to bring it back until there's a fair rate. There's no debate about it."

So how does that square with the 'effective' rate of 26%? As you, yourself said, "why should I take into account the very things that are in doubt". But you do. As for what the 'effective' figure should be, refert to Cook. Ask him at what rate Apple will be prepared to pay its taxes and then let him set the provision accordingly. As it stands, nobody knows and the 26% figure is fictional.

 

[draugminaion]

What on earth are you quibbling about now? Either Apple has paid its taxes or it hasn't. Right now it hasn't paid taxes on $214bn of cash stowed away but placed a line in its accounts as if it had paid the US tax on it. A provision isn't even an IOU.

A provision shall be recognized if the following criteria are fulfilled:

• an entity has a present obligation as a result of a past event;
• it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation;
• a reliable estimate can be made of the amount of the obligation.[2]
• a specific current statement, the entity will accept certain responsibilities and other parties have valid expectations that the entity will discharge its responsibilities.

https://en.m.wikipedia.org/wiki/Provision_(accounting)

Looks like more than an IOU to me.

You admit that you have witnessed the 60 Minutes interview where Cook said he would not repatriate the money until Apple got a more favourable rate. Here it is again in print. How much more blatant can you get than this?

You said Cook said he "had no intention". Cook in fact said he "would love to". He has also often said they are trying to make it happen, and recently that they have prepared for having it happen next year.

So how does that square with the 'effective' rate of 26%?

Easy peasy. If they would take all profits home they would pay 35%. But they don't so they pay less, they pay 26%. How do you unsquare it?

As you, yourself said, "why should I take into account the very things that are in doubt". But you do.

Nope. Just trying to make sense of this. You are not helping.

As for what the 'effective' figure should be, refert to Cook. Ask him at what rate Apple will be prepared to pay its taxes and then let him set the provision accordingly. As it stands, nobody knows and the 26% figure is fictional.

Apple's filings do not have 'effective' in scare quotes. Should we not assume a standard dictionary meaning for the word in that case? You seem to be assuming that of course it cannot be the standard dictionary meaning. Why?

 

[Parkin Pig]

This guy summed it up beautifully...

 

[apolloa]

I think I do actually. I have been following this case on other forums and my understanding is that the EU's case is on shakier ground than many of us realise.

If this were China, where the ruling communist party is an unabashed dictatorship, then yeah, their word would be law.

But in an organisation like the EU governed by law? There has been no illegal tax deal or dodging dealing as far as Apple is involved here.

Each EU member is able to establish their own tax laws and collect the funds as they wish. What the EU does have is a commission that regulates anti-competitive practices.

Apple did not break the law in Ireland. They paid the taxes they were supposed to pay (whether we think those tax laws are "fair" does not mean following them makes one a criminal). The EU has decided that Ireland’s tax laws give them an unfair business advatage over other EU countries. How that is Apple’s fault or their problem is beyond me.

If the EU thinks Ireland’s tax codes are anti-competitive then force Ireland to revise those laws. But asking for "back taxes" from tax codes that did not actually exist for the last ten years is absurd.

Continue to fight, Apple. Continue to fight and continue to win. We will have our answer in time.

you STILL don't get it, it's not rocket science but many on here are treating it as such, Apple has to pay back taxes it owes as it was given an unfair advantage by a Europen single market member, it is the same of any other member state, if you want to receive money from the pockets of ever single person in a member state for aid, as Oreland has been for years, then you MUST abide by EU law and legislation.
Ireland has been receiving more money from those pockets of the people in Europe then it has given back, whilst ignoring laws and legislation it MUST abide by.
Both Ireland and Apple FULL WELL KNOW THIS, it's the law, they would have signed documents agreeing to accepting these terms in order to operate in the EU. So now they have to pay what they owe, and later on Ireland will be punished by the EU.

It's simple, they both chose to ignore the law, and try to get away with it, and the law states Apple will have to pay back the taxes it owes to a country that gave it an unfair advantage. Because it doesn't like the richest coporation in the planet laundering billions though a country claiming more money in support then they give back!

You don't have your cake eat it and stick two fat chubby fingers up at the hand that's feeding you and expect to get away with it.

You people can attempt to argue as much as you want on the country, but the real tax European experts have stated they are very surprise at Apples and Ireland's reactions to a ruling everyone was expecting, because it's very clear the law was breached. No one expects an appeal to be won.

Apple are not being picked on, they are just one of the many in the list the EC is going after, they are laws and regulations that have always existed or even changed have still been ignored, these are laws and regulations ever country knows about and had to abide by, they can set their taxes but THEY MUST obits by higher EU legislation and law, ESPECIALLY if you want money from the rest of the EU to prop your country up! A job that abiding by the law collecting the taxes your supposed to do would resolve for you.

 

[draugminaion]

This guy summed it up beautifully...View attachment 648273

Yup. Old man yells at cloud. Perfect.
[doublepost=1472988208][/doublepost]

you STILL don't get it, it's not rocket science but many on here are treating it as such, Apple has to pay back taxes it owes as it was given an unfair advantage by a Europen single market member, it is the same of any other member state, if you want to receive money from the pockets of ever single person in a member state for aid, as Oreland has been for years, then you MUST abide by EU law and legislation.
Ireland has been receiving more money from those pockets of the people in Europe then it has given back, whilst ignoring laws and legislation it MUST abide by.
Both Ireland and Apple FULL WELL KNOW THIS, it's the law, they would have signed documents agreeing to accepting these terms in order to operate in the EU. So now they have to pay what they owe, and later on Ireland will be punished by the EU.

It's simple, they both chose to ignore the law, and try to get away with it, and the law states Apple will have to pay back the taxes it owes to a country that gave it an unfair advantage. Because it doesn't like the richest coporation in the planet laundering billions though a country claiming more money in support then they give back!

You don't have your cake eat it and stick two fat chubby fingers up at the hand that's feeding you and expect to get away with it.

You people can attempt to argue as much as you want on the country, but the real tax European experts have stated they are very surprise at Apples and Ireland's reactions to a ruling everyone was expecting, because it's very clear the law was breached. No one expects an appeal to be won.

Apple are not being picked on, they are just one of the many in the list the EC is going after, they are laws and regulations that have always existed or even changed have still been ignored, these are laws and regulations ever country knows about and had to abide by, they can set their taxes but THEY MUST obits by higher EU legislation and law, ESPECIALLY if you want money from the rest of the EU to prop your country up! A job that abiding by the law collecting the taxes your supposed to do would resolve for you.

It's not that simple. The EU competition commission is not a court of law. That Ireland broke competition law is an opinion that Ireland disagrees with. That the tax can be reclaimed retroactively is something Ireland disagrees with. And not just Ireland disagrees.
Reclaiming those taxes could easily cost Ireland more than that 13billion. If corporations see that the agreements with Ireland can not be depended on, they will rethink their plans in Ireland. Tens of thousands of jobs could end up somewhere else. Fewer jobs means less income tax, less VAT, more unemployment benefits.
This is an invitation to the first round of negotiations.