Britain woos Apple after tax row with EU

Firm gets £11bn bill after ‘sweetheart deal’ with Ireland exposed Boss hits back and threatens to cut jobs No10 says: Tech giant is welcome in UK

APPLE would be ‘welcome’ to relocate to the UK in the wake of the firm’s tax row with Brussels, Downing Street said yesterday.

The US tech giant was ordered to pay £11.1billion in unpaid taxes, plus an estimated £5billion interest, because of a sweetheart deal with Ireland.

Under the 25-year arrangement – which the European Commission found was illegal – Apple paid as little as 0.005 per cent tax on profits from sales in Europe, effectively £50 on every £1million it made.

Last night the company insisted the EC’s order was putting jobs at risk.

The ruling could effectively end tax competition between EU members trying to attract investment from foreign companies. But No 10 acknowledged that the UK, which has one of the lowest corporation tax rates in the EU, could gain a competitive advantage after Brexit.

Asked whether Apple could shift its European operations to the UK, a spokesman for Theresa May said: ‘Britain is open for business.

‘We would welcome any company wishing to invest in Britain and Britain’s workforce. We had a record year for inward investment in the run-up to May … We are committed to making the trading conditions for companies in Britain as positive for them as it can be, as long as it’s positive for the country as a whole.’

Neil Wilson, analyst at ETX Capi- tal, said: ‘The European Commission seems to be treading very close to interfering with the tax rules of member states … Britain could benefit. If Ireland cannot offer sweetheart deals, the City of London can perhaps offer something more appealing outside the bloc.’

EU countries are nervous that they could be undercut by the UK. Swedish PM Stefan Loefven has warned that the EU would make Brexit ‘more difficult’ if Britain went ahead with plans to cut cor- poration tax. Last night Apple chief Tim Cook accused EU competition officials of targeting his firm with laws that did not exist.

He said: ‘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.

‘The Commission’s case is not about how much Apple pays … it’s about which government collects the money. It will have a profound and harmful effect on investment and job creation in Europe [where Apple employs 22,000]. Apple follows the law and pays all of the taxes we owe wherever we operate. We will appeal and we are confident the decision will be overturned.’

The firm’s chief financial officer Luca Maestri said the 0.005 per cent effective tax rate was a ‘completely made-up figure’, adding that the decision will be ‘devastating for the European economy’.

Apple set up its sales operations in Europe so customers bought from a subsidiary in Ireland, not its physical shops across the continent. Investigators found Irish authorities and Apple agreed a deal in 1991 where a small percentage of profits were taxed in Ireland and the rest were not taxed anywhere.

The probe revealed most of the profit was allocated to a mysterious ‘head office’ with no premises.

Apple recorded profits of £13.6billion in 2011, but paid only £8.51million of corporate tax in Ireland – an effective rate of about 0.05 per cent instead of the 12.5 per cent paid by other businesses.

EU competition commissioner Margrethe Vestager said: ‘This effective tax rate dropped further to as little as 0.005 per cent in 2014.’

She ordered the Irish government to collect the taxes investigators calculated should have been paid covering the ten years to 2014.

If the bill – which is equal to all of Ireland’s annual healthcare budget – were paid, it would put the country in the black for the first time in a decade. But finance minister Michael Noonan has vowed to fight the EC verdict ‘to challenge the encroachment of EU state aid rules into the sovereign member state competence of taxation’.

He denied doing deals with taxpayers, adding: ‘Our tax system is founded on the strict application of the law … without exception.’

Miss Vestager said officials were looking into whether Amazon and McDonald’s would face similar demands to Apple.