Monday, September 05, 2016

IRELAND - The Apple Wars

"European Union: Apple owes Ireland nearly $15 billion in back taxes" PBS NewsHour 8/30/2016

This is also a Greed File.

Excerpt

SUMMARY:  After uncovering an illegal deal, the European Union ruled that Apple pay over $14.5 billion in back taxes to Ireland.  The EU's antitrust regulator found that the country and the tech giant had made an agreement that allowed Apple to pay less than 1 percent in corporate tax for over a decade.  Apple plans to appeal the decision.  Hari Sreenivasan speaks with EU Commissioner Margrethe Vestager.

HARI SREENIVASAN (NewsHour):  The European Commission ruled today that Ireland must collect $14.5 billion in back taxes from Apple.  The announcement fueled new tensions between the U.S. and Europe over the role of multinational corporations, how they are taxed, and whether it should be considered a subsidy.

The antitrust regulator for the EU said Ireland had given Apple a sweetheart tax deal for well over a decade, with special laws that effectively allowed Apple to pay less than 1 percent corporate tax.  The EU accused Apple of setting up two companies in Ireland with a head office that only exists on paper.  The profits from European stores all go to the Ireland head office and are essentially untaxed.

Apple said it would appeal the decision and denied the characterization.  In a statement, the company's chief executive, Tim Cook, said the European Commission is trying to — quote — “rewrite Apple's history in Europe, ignore Ireland's tax laws and upend the international tax system in the process.”  The company has more than $200 billion in cash.

I spoke with Commissioner Margrethe Vestager, who announced the decision.

Ms.  Vestager, thanks for joining us.

First off, what gave Apple an edge in Ireland that was unfair in the eyes of the EU?

MARGRETHE VESTAGER, European Commission:  Well, we have a long longstanding prohibition of state aid, which means benefits, advantages to a selected company.

And that may come in any form, as a piece of land, a favorable loan, a grant or a tax benefit.  And, of course, any member state can have their own tax legislation.  We would never question that.  But the thing is that you cannot give a specific company a benefit or an advantage which is not open to other companies.

HARI SREENIVASAN:  Is there evidence that this was specific to Apple and not to all the other companies that are doing business in Ireland?

MARGRETHE VESTAGER:  Yes, it is.

This arrangement is due to two things which are none of our concern, how Apple is organized and the Irish tax legislation.  But the thing that is specific is two tax rulings — are two tax rulings that are directed specifically to Apple.

And tax rulings are, by nature, specific because they are directed from the government or from the authorities to a specific company.  And this is only for them.  It is not for other companies.

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