$18bn

EU ANTITRUST regulators ordered Apple yesterday to pay up to €13 billion (R209bn) in taxes plus interest to the Irish government after ruling that a special scheme to route profits through Ireland was illegal state aid.

The massive sum, 40 times bigger than the previous known demand by the European Commission to a company in such a case, could be reduced, the EU executive said, if other countries sought more tax themselves from the US tech giant.

Apple, which with Ireland said it would appeal the decision, paid tax rates on European profits on sales of its devices and services of between just 0.005 percent in 2014 and 1 percent in 2003, the commission said.

“Ireland granted illegal tax benefits to Apple, which enabled it to pay substantially less tax than other businesses over many years,” said Competition Commissioner Margrethe Vestager, whose crackdown on mainly US multinationals has angered Washington, which accuses Brussels of protectionism.

Facing probes Online retailer Amazon.com and hamburger group McDonald’s face probes over taxes in Luxembourg, while coffee chain Starbucks has been ordered to pay up to €30 million to the Dutch state.

A bill of €300m this year for Swedish engineer Atlas Copco to pay Belgian tax is the current known record. Other companies ordered to pay back taxes in Belgium, many of them European, have not disclosed figures. For Apple, whose earnings $18bn (R259bn) last year of were the biggest ever reported by a corporation, finding several billion dollars should not be an insurmountable problem. The €13bn represents about 6 percent of the firm’s cash pile. Apple’s earnings in the course of last year

As of June, Apple reported it had cash, cash equivalents and marketable securities of $231.5bn, of which 92.8 percent, or $214.9bn, were held in foreign subsidiaries. It paid $2.67bn in taxes during its latest quarter at an effective tax rate of 25.5 percent, leaving it with net income of $7.8bn, according to company filings.

The European Commission in 2014 accused Ireland of dodging international tax rules by letting Apple shelter profits worth tens of billions of dollars from tax collectors in return for maintaining jobs. Apple and Ireland rejected the accusation.

“I disagree profoundly with the commission,” Irish Finance Minister Michael Noonan said. “The decision leaves me with no choice but to seek cabinet approval to appeal.

“This is necessary to defend the integrity of our tax system; to provide tax certainty to business; and to challenge the encroachment of EU state aid rules into the sovereign member state competence of taxation.”

Disputed system Ireland also said the disputed tax system used in the Apple case no longer applied and that the decision had no effect on Ireland’s 12.5 percent corporate tax rate or on any other company with operations in the country.

“The European Commission has launched an effort to rewrite Apple’s history in Europe, ignore Ireland’s tax laws and upend the international tax system in the process.

“The commission’s case is not about how much Apple pays in taxes, it’s about which government collects the money. It will have a profound and harmful effect on investment and job creation in Europe,” Apple said. – Reuters