Ap­ple to ap­peal EU tax de­ci­sion

The Myanmar Times - - International Business -

SIL­I­CON Val­ley tech ti­tan Ap­ple will fight an EU de­mand for a record 13 bil­lion eu­ros (US$14.5 bil­lion) in back taxes in Ire­land, a move Wash­ing­ton warned could dam­age transat­lantic eco­nomic ties.

Brus­sels said Ap­ple, the world’s most valu­able com­pany, avoided vir­tu­ally all tax on its busi­ness in the bloc by il­le­gal ar­range­ments with Dublin which gave the com­pany an un­fair ad­van­tage over com­peti­tors.

Ap­ple and the Ir­ish gov­ern­ment im­me­di­ately said they would ap­peal against the Euro­pean Com­mis­sion rul­ing, with the iPhone maker warn­ing it could cost Euro­pean jobs.

The White House mean­while cau­tioned against “uni­lat­eral” mea­sures by the EU.

“This de­ci­sion sends a clear mes­sage. Mem­ber states can­not give un­fair tax ben­e­fits to se­lected com­pa­nies, no mat­ter if Euro­pean or for­eign, large or small,” EU com­pe­ti­tion com­mis­sioner Mar­grethe Vestager said.

“The Com­mis­sion’s in­ves­ti­ga­tion con­cluded that Ire­land granted il­le­gal tax ben­e­fits to Ap­ple, which en­abled it to pay sub­stan­tially less tax than other busi­nesses over many years,” she added.

Ire­land has at­tracted multi­na­tion­als over many years by of­fer­ing ex­tremely favourable sweet­heart tax deals to gen­er­ate much-needed jobs and in­vest­ment.

But fol­low­ing a three-year-long in­ves­ti­ga­tion Brus­sels said the Ap­ple ar­range­ment broke EU laws on state aid.

The find­ings come amid grow­ing ten­sions be­tween Wash­ing­ton and Brus­sels over a se­ries of EU an­titrust in­ves­ti­ga­tions tar­get­ing other gi­ant US com­pa­nies such as Google, Ama­zon, McDon­ald’s, Star­bucks and Fiat Chrysler.

Ap­ple has had a base in the south­ern city of Cork since 1980 and em­ploys nearly 6000 peo­ple in Ire­land, through which it routes its in­ter­na­tional sales to­talling bil­lions.

Ap­ple chief Tim Cook said he was “con­fi­dent” the EU rul­ing would be over­turned, adding that the com­pany was the big­gest tax­payer in Ire­land, the US and the world.

“The most harm­ful ef­fect of this rul­ing will be on in­vest­ment and job cre­ation in Europe,” he said.

Mr Cook warned that the rul­ing was a “dev­as­tat­ing blow to the sovereignty of EU mem­bers over their own tax mat­ters”, echo­ing the con­cerns of Dublin over the de­ci­sion.

Ire­land’s Fi­nance Min­is­ter Michael Noo­nan de­scribed the Euro­pean Union’s rul­ing as “bizarre” and “an ex­er­cise in pol­i­tics by the Com­pe­ti­tion Com­mis­sion”.

Dublin, which suf­fered from harsh aus­ter­ity mea­sures af­ter it was bailed out dur­ing the eu­ro­zone debt cri­sis, has vig­or­ously de­fended its low tax rates as a way of boost­ing the econ­omy.

“If you look at the small print on an Ap­ple iPhone, it says de­signed in Cal­i­for­nia and man­u­fac­tured in China and that means any prof­its that ac­crued didn’t ac­crue in Ire­land and so I can’t see why the tax li­a­bil­ity is in Ire­land,” he said.

But Ms Vestager said Ap­ple’s Ir­ish op­er­a­tion was a sham – Ap­ple’s “so-called head of­fice in Ire­land only ex­isted on pa­per. It had no em­ploy­ees, no premises and no real ac­tiv­i­ties.”

Ap­ple paid an ef­fec­tive cor­po­rate tax rate of just 0.005 per­cent on its Euro­pean prof­its in 2014 – equiv­a­lent to just 50 eu­ros for ev­ery mil­lion, Ms Vestager said.

The Ap­ple tax bill dwarfs the pre­vi­ous EU record for a state aid case – 1.3 bil­lion eu­ros for the Nur­bur­gring race track in Ger­many.

While the $14.5 bil­lion sum it­self is un­likely to trou­ble Ap­ple with its mas­sive $600 bil­lion of mar­ket cap­i­tal­i­sa­tion and $234 bil­lion in rev­enue last year, the po­lit­i­cal ram­i­fi­ca­tions are huge.

The US Trea­sury said the rul­ing “could threaten to un­der­mine for­eign in­vest­ment, the busi­ness cli­mate in Europe, and the im­por­tant spirit of eco­nomic part­ner­ship be­tween the US and the EU”.

The Ap­ple de­ci­sion may also com­pli­cate strug­gling EU-US talks on what would be the world’s big­gest free trade deal, meant to be com­pleted be­fore US Pres­i­dent Barack Obama steps down in Jan­uary next year. –

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