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Report Says U.S. Government Filed to Intervene in Apple's Tax Appeal in Europe
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But it's not a special deal. That's the problem with the EC ruling. The EC is massively out of control.
Not sure about the standard Irish Corporation Tax, in the UK it is approx 22% so I guess Ireland are similar. Sliding scale dependend on size, two tier, smaller companies pay less, but around 22% of Profit.
So at <1% tax how can this not be a a 'special deal'? that apple struck.
It was 1991 when apple opened in Ireland, anyone know if this deal was from '91 or renegotiated as they grew? assuming deal struck in '91 Tim Cook joined apple in 1998 so he was not a part of the original negotiations.
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No, the fuss is mostly about the money earned by Apple overseas and the lower taxes paid on it (as in the case of their Cork, Ireland subsidiary, where Apple apparently got a sweetheart deal from the Irish government, which deal the EU now says contravenes their authority and umbrella tax policies), and also about the fact any such overseas earnings are kept overseas to avoid a hefty 35% US repatriation tax.
Iow, the EU asserts the Irish government's deal with Apple was illegal under their constitution, and now wants Apple to cough up Billions in back taxes.
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What is it's "fair share," precisely? I'm seriously not trying to bait you, just curious because I hear this phrase tossed around regarding Apple quite a lot.
Fair is atleat the % of earnings a mom&pop shop would have to pay.
So somewhere between 20 and 40% depending on how you calculate it.
So somewhere between 20 and 40% depending on how you calculate it.
You clearly don't understand this case.
Let's put it in simple terms. If the US government did a deal with Apple to pay 1% tax but insisted that every other company in the US paid 35% tax would you think that was fair and equitable?
Except its more like making an agreement that you and only you get to buy a new iPhone for $0.28 (not $400) every year for 10 years. They aren't paying half of the official corporate tax in Ireland, they are actually paying 2500 times less than the official rate.
It's not about the fact that there is a special agreement but about the fact that it's THAT special. It's just insane when you compare it to the profits Apple makes every year.
I think Apple started in 1980 in Ireland. The initial tax clarification is from 1991.
Not sure about now but I think in the past it was possible to setup Irish companies that weren't tax resident in Ireland. It sounds like Apple has 2 companies , one tax resident and another not. How they split the revenue between the 2 companies allows them to vary their effective tax rate.
That is only a special deal if only they were allowed to do it.
I'll call my taxman and ask for a 1% rate, let's see if my threat to move elsewhere works, wish me luck guys!
What a joke...
Glassed Silver:ios
What a joke...
Glassed Silver:ios
Which aspect of what the European Commission alleges regarding Apple's Irish taxes wouldn't apply to other similarly situated companies? In other words, what is it that you think Ireland has allowed Apple to do which it wouldn't allow other companies to do?
If you dig into what the European Commission is actually claiming, you might realize that this is more about it objecting to certain Irish tax policies in general (and how companies might be able to use them to avoid substantial taxation) rather than special treatment being given to Apple. The European Commission pretends this is about the latter, because it has to in order to have the authority to do something about the situation. But that's just a facade; substantively this is about the former.
That said, to try to answer your question, Apple set up in Ireland in the early 80's. If, when referring to a deal, you mean a tax ruling (i.e. what Ireland refers to as an advance opinion), then Ireland issued one regarding Apple in 1991 and another in 2007. (It's possible there are others, but we know about those two.)
The tax laws of many nations are complicated and leave open the possibility of numerous interpretations when it comes to particular circumstances. So nations have processes which allow them to clarify how their tax laws would apply to particular circumstances. (In the U.S. we have what are referred to as private letter rulings.) A party effectively asks a government agency whether it's a allowed to do things a certain way, or describes a scenario and asks what the tax implications would be. The government agency then decides how its tax laws would apply in that scenario and advises them accordingly - e.g., it tells them that they can or can't do things in certain ways. I'm not familiar with how often such advance interpretations are provided in other countries, but in the U.S. it happens quite often. People and entities need to be able to know (with some confidence) how the (tax) law would apply before they make certain decisions, and not just find out years later. So there's a need for these kinds of tax rulings or advance opinions.
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Apple has multiple (i.e. more than two) Irish subsidiaries.
You are right though, part of the issue was Ireland's policies when it came to earnings being apportioned between related parties. The European Commission thinks that an arms length principle should have applied. But, the best I can tell, Ireland wasn't required to apply such a principle. That, in combination with other Irish tax policies, meant that some companies could do what Apple did and avoid substantial taxation.
Yes, the amount of tax they are required to pay is ridiculously low. No, that doesn't make it "state aid". State aid is not simply a tax cut. State aid is an arrangement where a company that would otherwise have difficulty competing in a market is being propped up by the government vs. competitors. Can the European Union really argue that Apple would have difficulty competing with a higher tax rate? No. They would have lower profits, but they would obviously still be able to compete.
Bottom line is that this is a shady deal that benefits Apple and Ireland at the expense of the rest of the EU. That seems to be the core of the motivation of the EU to pursue this, and I am sure the EU is using any legal grounds it can stop this kind of thing. In any case I find it odd in the extreme that Apple's R&D is in Ireland, supposedly, but all new Apple software features are rolled out in the US first even though the EU has a larger population....
Rules are rules, that's right. That gets to the heart of what's wrong with what the European Commission is trying to make Ireland do. The rule of law is an important concept. People and entities need to to be able to rely on the rules. If they act in accordance with those rules, they need to be able to have confidence that they won't later be punished for it. If necessary, the rules can be changed going forward. But you can't change the rules which applied in the past and punish parties for acting in accordance with the then-existing rules.
Apple asked the relevant authority - Ireland - what the rules were. It should be able to rely on a sovereign nation's interpretations of its own rules. It made decisions and took actions based on its understanding - which came from the horse's mouth, so to speak - of the rules. We shouldn't try to go back and punish those decisions or actions unless we can go back in time and give Apple - or others - to change them.
If the EU feels that Ireland broke the EU's rules, that Ireland violated the agreement between itself and the EU, then that's between them. The EU should, perhaps, punish Ireland. But its shouldn't feel entitled to force Ireland to punish Apple for Apple abiding by the rules which Ireland had and which affected Apple.
Why should Apple's lawyers have known? When you have questions about a nation's tax policies, whom should you ask for clarity on them? If the nation itself - i.e., the relevant government agency - tells you that its rules mean X, why shouldn't you feel confident acting under the belief that its rules mean X?
That's correct, and the arrangenent was not available to all companies, it was an ad-hoc special deal with Apple. That is what makes the deal illegal under EU law.
Some have conflated issues (e.g. Apple's foreign tax situation with its domestic tax situation) and thus criticized Apple with regard to domestic taxes. Others are largely unaware of the realities of Apple's tax situation and, based on that, do the same. Still others, I suppose, continue to believe that extra-territorial taxation is appropriate and/or productive and thus criticize Apple for not paying U.S. taxes on all of its (legitimate) foreign earnings - or, for delaying that taxation.
But the reality is that Apple pays a very high (U.S.) tax rate on the earnings which come from its domestic sales and from some of its foreign sales. Apple avoids a great deal of foreign taxation, but it's hard to credibly argue that Apple doesn't pay its fair share of U.S. taxes.
I wonder about that. A few years ago I was talking about our company structure since it is a little odd and my CEO said that due to some provision of our constitution the government accepted company structures as presented and didn't query them. Not sure what exactly he was referring to it could apply here.
As much as this does suck - the REAL solution is to lower the corporate tax rate and get rid of the entire tax shelter concept. The USA has the highest corp tax rate by far. Get that down to reasonable levels and things will correct themselves.
I need to get a true understanding of whats happened here.
What I know so far:
Apple European HQ is in Ireland, I'm 99% sure but can someone clarify?
Apple do some manufacturing in Ireland, we bought a few custom iMacs they arrived from Ireland.
They have appleCare support in Ireland, I've spoken with them, very nice too.
And thats is all I know about this mess.
What I'd like to know.
The 80s what happened then?
The 1991 tax agreement what was the % and terms?
The 2007 tax agreement what was the % and terms?
Was the any change between '91 and '07 to the agreement if so what?
Who at apple and who in Ireland were involved in negotiatons?
The back tax, when is this back taxed to?
How many staff are employed, are they locals and were buildings built for apple if so what scale?
...
Assuming back tax from 1991? why 26 years to get to this? why has it taken the EU so long? well I can guess that, EU slow at the best of times, apple not expected to be so phenomenally sucsessfull. But 26 years!
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If Apple does have to pay 13 billion euros to Ireland can they not file for a tax credit from the U.S govt?
It's the same exact "deal" any other company can get in Ireland. At issue is differences in Irish tax codes but the EC lacks the authority to force Ireland to change their laws and tax code. So they make up this "special deal" that doesn't exist.
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What you are leaving out is it's a deal available to EVERY company. So it's not a special deal at all except in the warped minds of the EC.
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You are 100% incorrect. This is not an Apple only deal and is available to many companies.
Have they shown that? Even the press release says "Tax rulings as such are perfectly legal. They are comfort letters issued by tax authorities to give a company clarity on how its corporate tax will be calculated or on the use of special tax provisions."