US Treasury guidance could stop Apple from recouping Irish taxes at home
The U.S. Treasury Department on Thursday issued new legal guidance that might prevent Apple from recouping any back taxes owed in Ireland by claiming them against taxes it would normally pay in America.
"We are closing another tax loophole that contributes to the erosion of our tax base," said the Treasury's Assistant Secretary for Tax Policy, Mark Mazur, in a statement seen by Reuters. The guidance limits the scope with which multinational corporations can apply to have foreign tax credits count against their U.S. taxes.
The European Commission recently concluded that Irish tax deals with Apple constituted illegal state aid, and ordered the country to collect $14.5 billion in back taxes from the Cupertino, Calif., company. Both Apple and the Irish government are planning to appeal the decision, the latter because it's worried about losing appeal with foreign businesses. Apple has already made commitments to stay in the country.
Although the Irish government has since moved to close some loopholes, for many years Apple was able to funnel billions in international revenue and pay minimal taxes. In 2014, the iPhone maker paid just 0.005 percent on its European profits, a minute fraction of Ireland's standard corporate tax rate.
While it's uncertain if the new Treasury guidance will impact Apple, a spokesperson for the agency specifically mentioned wanting to counter credits companies might claim after state aid investigations.
"We are closing another tax loophole that contributes to the erosion of our tax base," said the Treasury's Assistant Secretary for Tax Policy, Mark Mazur, in a statement seen by Reuters. The guidance limits the scope with which multinational corporations can apply to have foreign tax credits count against their U.S. taxes.
The European Commission recently concluded that Irish tax deals with Apple constituted illegal state aid, and ordered the country to collect $14.5 billion in back taxes from the Cupertino, Calif., company. Both Apple and the Irish government are planning to appeal the decision, the latter because it's worried about losing appeal with foreign businesses. Apple has already made commitments to stay in the country.
Although the Irish government has since moved to close some loopholes, for many years Apple was able to funnel billions in international revenue and pay minimal taxes. In 2014, the iPhone maker paid just 0.005 percent on its European profits, a minute fraction of Ireland's standard corporate tax rate.
While it's uncertain if the new Treasury guidance will impact Apple, a spokesperson for the agency specifically mentioned wanting to counter credits companies might claim after state aid investigations.
Comments
Can you point me to the actual amount of taxes Apple paid Ireland in 2014? I don't want the numbers by the corrupt EU commission, I want Ireland's numbers.
As for state aid, I see every state in the US making various deals with all corporations to locate in their state. Are these forms of legal state aid or just good business?
Spot on. Otherwise, this will be challenged in court by thousands of US companies (and then government will likely lose, since it would upend the bargain implicit in pretty much everything in the tax code).
The issue will be moot within a year, since Cook has promised to bring a lot of it back. I am guessing that Apple will bring enough back to be able to take a tax credit for any additional amounts paid to the EU. This is a fight between the EU and Ireland (and now between the EU and the US), and Apple, caught in the middle, is simply being unfairly and egregiously maligned.
(Btw, cue the handout-seekers that will inevitable show up in this thread).
This should say "According to the EU report and specifically refuted by Tim Cook, ..." He's said flat out that he has no idea how they came up with that completely erroneous 0.005 percent figure.
Apple pays what it owes. It is under no obligation to pay more than what's required under the law.
Apple is not a charity, it is a for profit corporation.
They got the money, heck I hope the government drops the gavel on them and Google and Facebbol and every rich SOB that screws us. Fuck that shit.
that doesn't change one damn thing. Pay what you owe instead of raising debt to pay dividends. Seriously fucked up morals and hopefully the justice dept comes and smacks some sense into them with some serious penalties. Like BAMM!
Because you do know that delaying repatriation of foreign earnings is essentially the same as holding a portion of your earnings in a 401(K). Both are perfectly legal. Both make sense as they afford the owner of the money to defer a tax obligation (not avoid, not dodge, not cheat). Defer. Perfectly legally.
You might have issue with the Irish tax structure that allowed Apple and other businesses to pay a low tax rate to Ireland, but that's a totally separate issue versus Apple holding foreign revenues and earnings overseas. Totally different. You know that, right?
Apple is legally obliged to pay the least taxes possible and maximize profits, or else they open themselves up to shareholders law suits.
The only people to blame are the legislators for writing the tax laws; but those are the people crying the loudest to deflect from their responsibility, so they can continue and continue taking lobbyists money.
As far as US corporations go, Apple pays a lot of taxes, not just in absolute terms, but also in percentage terms; some huge, profitable corporations literally pay ZERO taxes, but people keep picking on Apple, because it makes for better headlines piggybacking one's articles on a high name recognition brand.
EDIT: Nevermind. It is not true. Corporations are not required to maximize profits. Instead they are to operate in the best interests of the shareholders. Look into the business judgment rule (sometimes called doctrine) which pretty much guarantees any shareholder filing a lawsuit over Apple paying taxes would quickly see his lawsuit dismissed as long as Apple's directors weren't doing so for personal gain.
Perhaps you don't know corporate and tax law as clearly as you thought you did.