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European Union announces tax evasion investigations of Apple, Fiat & Starbucks

post #1 of 108
Thread Starter 
The executive body of the European Union formally announced on Wednesday that it is investigating Apple, Fiat and Starbucks for potential tax evasion by the trio of corporations in the continent it polices.

Cork
Apple's headquarters in Cork, Ireland, via Flickr user Sigalakos.


The European Commission is looking into whether Apple's Ireland-based corporations are in compliance with European Union rules on state aid. The commission is also investigating Starbucks' presence in the Netherlands, and Fiat Finance and Trade in Luxembourg.

"In the current context of tight public budgets, it is particularly important that large multinationals pay their fair share of taxes," said Joaqu?n Almunia, commission vice president in charge of competition policy. "Under the EU's state aid rules, national authorities cannot take measures allowing certain companies to pay less tax than they should if the tax rules of the Member State were applied in a fair and non-discriminatory way."
Apple's tax haven in Ireland has been investigated before with no fault found. The company contends that it pays all of the taxes it owes.
Article 107(1) of the Treaty on the Functioning of the European Union states that state aid which affects trade between states within the union and threatens to distort competition by favoring certain undertakings is in principle incompatible with the "EU Single Market." Selective tax advantages may amount to state aid.

Regarding Apple, the commission will examine the individual rulings issued by Irish tax authorities on the calculation of taxable profit allocated to Irish branches of Apple's Ireland-based companies: Apple Sales International and Apple Operations Europe.

Word first surfaced on Tuesday that the commission was set to announce a formal investigation into Apple. However, the iPhone maker is far from the only international company that relies on the tax laws of Ireland and other countries to avoid paying taxes.

Other investigations previously found that Apple did not break any laws in utilizing Ireland as a tax haven. A U.S. Senate investigation found that Apple paid just 2 percent tax on $74 billion in income made outside America, by moving billions of dollars in profits to affiliate corporations such as Apple Operations International in Ireland, where the effective tax rate is less than 2 percent.

Apple has insisted that the company pays all of its taxes and has broken no laws. The company holds the vast majority of its cash overseas to avoid paying high repatriation tax rates to bring that money back to the U.S.

Other major tech corporations noted for utilizing Ireland to avoid international taxes include Google, Microsoft, Facebook and Amazon.
post #2 of 108
Brussels%u2019 suits.
You allow tax heavens and then cry wolf?
Right!
post #3 of 108
Paying 2% of taxes while 'normal' companies pay so much more is ridiculous and needs to be addressed as soon as possible. It's morally wrong.
post #4 of 108

Tax evasion rather than tax avoidance? Interesting...

post #5 of 108
Bit disingenuous to investigate Apple. They are, like many companies, simply routing income through Ireland, The Netherlands & The Bermudas. Perfectly legal, as was found last time. I really can't see a problem with this. In fact, more companies should do this; making the most profit is the common goal of any company.

Short explanation on how this system works:


Long explanation:
http://tellmeyourview.wordpress.com/2013/02/03/the-double-irish-the-dutch-sandwich/
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post #6 of 108

Is Ireland getting a payback on these-why would they allow it?  Stupidity?

 
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post #7 of 108
Quote:
Originally Posted by dacloo View Post

Paying 2% of taxes while 'normal' companies pay so much more is ridiculous and needs to be addressed as soon as possible. It's morally wrong.

 

Normal companies? If you're talking about local companies, local taxes are still paid.. sales tax, employee income taxes, health, etc. The issue is that ANY international company can pick what country they base funds out of.. and that country gets the taxes..

 

Issue is. who gets the money? Europe? Germany? huh? What people don't understand, products sold by Apple are already paying local taxes and all we're talking about is the 'profit' repatriation tax... it's not really an easy answer.. because if they just pay everyone.. the mob of meme would tax companies into the ground.. 

 

It's all about the repatriation taxes.. USA is at 30% .. which is stupid!!! next highest? 15%.. Canada is under 10%.. This is a global economy, you set the rules, Ireland plays by them keeping a low rate(2%), then you bitch about it? pfffff.. The real issue is leveling the playing field with this rate.. 

 

And yet I can see the EU punishing Apple and other companies for following the LAW.. Don't like it, change it.. and yet, they can't.. because they cannot AGREE on enforcing rates on other sovereign nations, killing their right to control their own rates. hahaha! So, here we are, targeting companies and blaming them for political stupidity! 

 

Personally, I think USA should set it to about 10% or less.. but getting congress to do anything these days that makes sense is nearly impossible. We compete against these countries, yet we're at an ego-blown 30%


Edited by Adrayven - 6/11/14 at 5:33am
post #8 of 108

Originally Posted by dacloo View Post

Paying 2% of taxes while 'normal' companies pay so much more is ridiculous and needs to be addressed as soon as possible. It's morally wrong.

 

"normal" companies can do the same thing.  If ireland wants to set that rate to attract multinats, they are free to do so correct?  If a multinat wants to set up shop there for that benefit can they not?

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post #9 of 108
Nothing much will likely come out of this, except some bogus 'fine' so that they can declare a moral victory.

Waste of time.
post #10 of 108
Quote:
Originally Posted by PhilBoogie View Post

Bit disingenuous to investigate Apple. They are, like many companies, simply routing income through Ireland, The Netherlands & The Bermudas. Perfectly legal, as was found last time. I really can't see a problem with this. In fact, more companies should do this; making the most profit is the common goal of any company.

This. If they think the tax laws are at odds with EU laws, they should be investigating the tax commissions that created those laws rather than the companies that follow them.

That is assuming this isn't really just a money grab...
post #11 of 108
Quote:
Originally Posted by pazuzu View Post

Is Ireland getting a payback on these-why would they allow it?  Stupidity?

Can you elaborate on your 'payback' view please?
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post #12 of 108
Quote:
Originally Posted by PhilBoogie View Post

Bit disingenuous to investigate Apple. They are, like many companies, simply routing income through Ireland, The Netherlands & The Bermudas. Perfectly legal, as was found last time. I really can't see a problem with this.

If they're being investigated for tax evasion then that implies the EU thinks there is something illegal going on.

 

Or maybe the investigation is simply fact finding in advance of proposals to reform tax laws across national borders in the EU group.

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post #13 of 108
Quote:
Originally Posted by Adrayven View Post
 

It's all about the repatriation taxes.. USA is at 30% .. which is stupid!!! next highest? 15%.. Canada is under 10%.. This is a global economy, you set the rules, Ireland plays by them keeping a low rate(2%), then you bitch about it? pfffff.. The real issue is leveling the playing field with this rate.. 

 

And yet I can see the EU punishing Apple and other companies for following the LAW.. Don't like it, change it.. and yet, they can't.. because they cannot AGREE on enforcing rates on other sovereign right to control their own rates. hahaha! So, here we are, targeting companies and blaming them for political stupidity! 

 

Personally, I think USA should set it to about 10% or less.. but getting congress to do anything these days that makes sense is nearly impossible. We compete against these countries, yet we're at an ego-blown 30%

Disagree with the race-to-the-bottom mentality, unitary reporting and taxation of corporations makes much more sense.  Don't make "repatriation" an option; if profit is being registered within the Apple group, then Apple should pay corporation tax in its headquarters of note.

 

Corporation tax in the US is not 10%, so why should US companies get beneficial tax treatment from conducting business outside of the US?

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post #14 of 108
regarding sales taxes, I am assuming Apple gives back the sales taxes it collects to the appropriate gov.

Regarding corporate income tax:

For hardware, the way I understand it Apple pays its income tax in every EU countries then send the money into Ireland. So its a cash placeholder and it affects US Tax not EU tax. Ireland is a good place to hold cash because Apple can invest its cash and only pay 2% in tax to Ireland on the interest it makes.

For software and services, its another story, it looks like Apple is dodging EU taxes for everything itunes related. It does collect and pay back sales taxes, but from my understanding "profits" of those sales are all in iceland, which means they are dodging income taxes.

There are a lot of "loopholes" with internet sales of digital content. One example I can give is in the province of Quebec (Canada), it is illegal to sell a blueray or DvD with an english only soundtrack if the french track is available. Apple is not respecting that law with its itunes sales.
Edited by herbapou - 6/11/14 at 6:04am
post #15 of 108
Quote:
Originally Posted by Crowley View Post

Disagree with the race-to-the-bottom mentality, unitary reporting and taxation of corporations makes much more sense.  Don't make "repatriation" an option; if profit is being registered within the Apple group, then Apple should pay corporation tax in its headquarters of note.

 

Corporation tax in the US is not 10%, so why should US companies get beneficial tax treatment from conducting business outside of the US?

 



that would be impossible to monitor. for many reasons, companies can leave cash outside of there headquater country.
post #16 of 108
Quote:
Originally Posted by Ochyming View Post

Brussels%u2019 suits.
You allow tax heavens and then cry wolf?
Right!

It is 100% legally right and not at all morally wrong or ambiguous. If the EU does not like the laws THEY have created, they need to grow a pair and fix them.
post #17 of 108
Quote:
Originally Posted by Steven N. View Post



It is 100% legally right and not at all morally wrong or ambiguous. If the EU does not like the laws THEY have created, they need to grow a pair and fix them.

 



indeed.
post #18 of 108
Quote:
Originally Posted by Steven N. View Post


It is 100% legally right and not at all morally wrong or ambiguous. If the EU does not like the laws THEY have created, they need to grow a pair and fix them.

 

As previously mentioned in this thread, Apple are being investigated for tax evasion. That means that the EU believes, rightly or wrongly, that Apple hasn't followed the law.

post #19 of 108
Quote:
Originally Posted by herbapou View Post
 
Quote:
Originally Posted by Crowley View Post
 

Disagree with the race-to-the-bottom mentality, unitary reporting and taxation of corporations makes much more sense.  Don't make "repatriation" an option; if profit is being registered within the Apple group, then Apple should pay corporation tax in its headquarters of note.

 

Corporation tax in the US is not 10%, so why should US companies get beneficial tax treatment from conducting business outside of the US?

 



that would be impossible to monitor. for many reasons, companies can leave cash outside of there headquater country.

 

Exactly. At issue is where does the money sit.. right now, it's country that has the lowest taxes .. I'm not understanding why that would be hard to understand..  Who wouldn't do that? Any CFO would be fired for not taking advantage of legal tax law and working to benefit the company financially.. hell, if it didn't he'd be considered incompetent.. 

 

If the USA made it more advantageous to sit in the states, you can be certain that US based international companies would do exactly that. The answer is not simple, it's political.. So the EU is doing a witch hunt for cash.. 

post #20 of 108
Quote:
Originally Posted by Ochyming View Post

Brussels%u2019 suits.
You allow tax heavens and then cry wolf?
Right!

 

Exactly.  Ireland has certain laws that are beneficial.  It's not at all surprising that corporations choose to do business there.  It would be no different than if Pennsylvania said it was eliminating all corporate taxes for 10 years.  Businesses would flock to the state.  

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post #21 of 108
Quote:
Originally Posted by Crowley View Post
 

Disagree with the race-to-the-bottom mentality, unitary reporting and taxation of corporations makes much more sense.  Don't make "repatriation" an option; if profit is being registered within the Apple group, then Apple should pay corporation tax in its headquarters of note.

 

Corporation tax in the US is not 10%, so why should US companies get beneficial tax treatment from conducting business outside of the US?

 

Totally unrealistic and counter to the principles of the free market.  Capital flows along the path of least resistance.  If you want Apple to bring more money back into the U.S., you have to remove some of the obstacles.  Secondly, they get beneficial tax treatment because that's the law. The complexity of international tax law is way beyond what any of us laymen understand.  You can't just wave a wand and say "you have to pay U.S. tax rates now!"  

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post #22 of 108
Quote:
Originally Posted by iaeen View Post


This. If they think the tax laws are at odds with EU laws, they should be investigating the tax commissions that created those laws rather than the companies that follow them.

That is assuming this isn't really just a money grab...


The EU is investigating the tax regulation of Ireland, Luxemburg and the Netherlands for giving Apple anticompetitive advantage via lower taxes. If the EU finds any wrong doing it will be that of the tax offices in those countries. But never the less Apple will have to pay higher taxes.

But for click bait it is better to write Apple is investigated when the tax offices and their tax agreements with Apple are at issue.

post #23 of 108
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post #24 of 108
Interesting fact:

World hunger could be totally eradicated if the United States ALONE were to reduce it's yearly defence budget by 5%.
Edited by GTR - 6/11/14 at 6:40am
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post #25 of 108
Quote:
 
"In the current context of tight public budgets, it is particularly important that large multinationals pay their fair share of taxes," said Joaqu?n Almunia, commission vice president in charge of competition policy.

 

 

Clearly its better to go after successful people/companies than to actually fix the problem of ridiculously out of control gov spending.  /s

post #26 of 108
Quote:
Originally Posted by herbapou View Post

regarding sales taxes, I am assuming Apple gives back the sales taxes it collects to the appropriate gov.

Regarding corporate income tax:

For hardware, the way I understand it Apple pays its income tax in every EU countries then send the money into Ireland. So its a cash placeholder and it affects US Tax not EU tax.

AFAIK you've misunderstood then. According to records Apple pays virtually no company taxes on the profits from hardware sales in France, Italy, Spain and other EU countries. Because Apple has assigned certain IP to it's Irish subsidiary it collects licensing/royalty fees on products sold in the EU using that intellectual property with that money flowing to Ireland where technically the corporate tax rate is 12.5% (not 2%). Worse at least two of the three Ireland-resident but Apple-controlled companies don't even pay taxes to Ireland as they say they have no tax residency there nor anyplace else in the world.

As far as a "fine" for any taxes that may be owed that's not going to happen. The EU isn't after Apple or Fiat or Starbucks. The investigation is over how those companies have been able to shift operational profits from the country of sale to another EU country where little to no tax has been paid on those company profits and that country's involvement in it. In other word's possible violation of EU regulations on state aid that made "transfer pricing" possible for some large corporations.

What the EU could do however is rule that Ireland and/or Luxembourg must recover the taxes that should have been paid to EU member states if they find there's been some shady or uncompetitive dealings. In essence Ireland would be forced to go after Apple and others like them to collect the taxes they should have from past. years and I assume passing them on to the countries where the actual sales occurred. So it's Ireland's enabling involvement that's being investigated and may be punished, not Apple specifically.

Just to be clear then: The EU is not going after Apple. The investigation actually involves how profits are being shifted out of countries where the sales occur and into Ireland/Luxembourg/Netherlands where the taxes that really were due to France, Belgium, Italy and others have somehow been avoided. The EU Commission would seem to believe they have enough initial evidence of improprieties to warrant an official investigation.
Edited by Gatorguy - 6/11/14 at 7:00am
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post #27 of 108
Quote:
Originally Posted by herbapou View Post

There are a lot of "loopholes" with internet sales of digital content. One example I can give is in the province of Quebec (Canada), it is illegal to sell a blueray or DvD with an english only soundtrack if the french track is available. Apple is not respecting that law with its itunes sales.

If the law specifically refers to Blu-ray and DVD media then Apple isn't breaking any laws. It would be the same for Blu-ray and DVDs if the law was written in the 80s to specifically refer to VHS and Betamax.

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post #28 of 108
Quote:
Originally Posted by GTR View Post

Interesting fact:

World hunger could be totally eradicated if the United States ALONE were to reduce it's yearly defence budget by 5%.

But the news tells me we need a larger defense budget because they are out to get me¡

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post #29 of 108
Quote:
Originally Posted by SolipsismX View Post

But the news tells me we need a larger defense budget because they are out to get me¡

Don't be silly!

As if they're going to leave me alone to go and hassle you!
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post #30 of 108
Quote:
Originally Posted by SolipsismX View Post



If the law specifically refers to Blu-ray and DVD media then Apple isn't breaking any laws. It would be the same for Blu-ray and DVDs if the law was written in the 80s to specifically refer to VHS and Betamax.

 



Maybe Apple is "technically" respecting the law, but its still a loophole. I dont know the way the law was writing so its still possible Apple is illegal, depending on the way the law was done. Either the law is to specific and mention medias or its clear and applies to movies and tv content in genenal but is not "enforce" in the digital world.

As far as I am concerned, movies and tv shows should be force to include spanish/portugese/french/english soundtracks on all movies sold in north and south america.
Edited by herbapou - 6/11/14 at 6:58am
post #31 of 108
Quote:
Originally Posted by herbapou View Post

Maybe Apple is "technically" respecting the law, but its still a loophole. I dont know the way the law was writing so its still possible Apple is illegal, depending on the way the law was done. Either the law is to specific and mention medias or its clear and applies to movies and tv content in genenal but is not "enforce" in the digital world.

1) I wouldn't call a law that specifically refers to optical media as a loophole (which is how your previous comment reads) but even if has a larger scope and there is an actual loophole being exploited that's not the fault of the law, or rather the makers, for creating "an ambiguity or inadequacy in the law or a set of rules."

2) If Apple is breaking the law then they aren't exploiting a loophole. They are mutually exclusive for a specifically point. Either they are breaking the law or they aren't. If they are breaking the law then why hasn't anything been done?

3) Every now and then the term "spirit of the law" crops up. This means nothing. You might as well say that actual spirits have whispered into the lawmakers' ear to tell them its meaning.

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post #32 of 108
Quote:
Originally Posted by GTR View Post

Interesting fact:

World hunger could be totally eradicated if the United States ALONE were to reduce it's yearly defence budget by 5%.

Don't know. But it might be same reason some people post here in every thread saying the Beats headphones suck, over and over again.
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post #33 of 108
Quote:
Originally Posted by herbapou 
As far as I am concerned, movies and tv shows should be force to include spanish/portugese/french/english soundtracks on all movies sold in north and south america.

I have no specific problem with that but I do wonder about the cost compared to the number of native Portuguese and French speakers there in the Americas that would be buying these titles. It seems to be that in order of highest to lowest grossing it would be English, Spanish, Portuguese and French.

How many native French speakers are there in the Americas? How many of them of would prefer to have dubbed French over English, which the people I know from Quebec speak very well. Personally, I like tend to prefer movies in their native language with subtitles since a good part of acting is in the delivery.

If they choose Canadian French (not sure if this gets segmented further) then do they ignore other French speaking parts of the Americas or do they have to add dialect specific languages for them?

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post #34 of 108
Interesting fact:

World hunger could be totally eradicated if everyone but the United States were to reduce its yearly defence budget by 100%.

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post #35 of 108
Quote:
Originally Posted by SolipsismX View Post

Interesting fact:

World hunger could be totally eradicated if everyone but the United States were to reduce its yearly defence budget by 100%.

Interesting fact:

World hunger could be totally eradicated if the United States reduced everyone to 0%.
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post #36 of 108
Quote:
Originally Posted by SDW2001 View Post
 

 

Totally unrealistic and counter to the principles of the free market.  Capital flows along the path of least resistance. 

 

How is unrealistic?  Companies already report their figures to the countries that they operate in, so what is unrealistic about those figures being combined for all wholly-owned companies in a group?  The numbers exist, adding them together is not only not unrealistic, it's not even particularly hard!  Breaking it down country-by-country might be tricky if you wanted to take that approach for unitary taxation, but that's what auditors are for (I also favour much harsher rules for auditors to comply with).

 

A little bit of cooperation, a well policed companies-register and record of ownership, and some carrots and sticks applied in the form of law.  There you have it, not a problem.

 

Don't see what "the principles of the free market" or the nature of capital have to do with anything.  We're talking about taxation which is, by definition, a distortion of the free market.  Capital also flows where the law says it has to flow, when the law does so.

 

Quote:
Originally Posted by SDW2001 View Post
 

If you want Apple to bring more money back into the U.S., you have to remove some of the obstacles. 

 

That is an option, and is a race-to-the-bottom recipe for disaster.

 

Another option is to remove the alternatives and for state tax authorities to show some backbone.  Demand country-by-country, or demand repatriation, either are good, but the middle ground we're currently in is most definitely bad.

 

Quote:
Originally Posted by SDW2001 View Post
 

Secondly, they get beneficial tax treatment because that's the law. 

 

Is it the intention of the law?  No, the intention is that they repatriate, the law just wasn't made robust enough to ensure that happens.  So change the law so that it does or come up with an alternative.

 

Quote:
Originally Posted by SDW2001 View Post
 

The complexity of international tax law is way beyond what any of us laymen understand.

 

I'm not talking about international tax law, I'm talking about US tax law.  And hopefully other countries as well, but since we're talking about Apple let's start with the US.

 

And it really isn't all that complicated.  The money men would have you think that it is, to stop inconvenient questions, but it's not beyond the comprehension of average people.

 

Quote:
Originally Posted by SDW2001 View Post
 

You can't just wave a wand and say "you have to pay U.S. tax rates now!"  

 

No, you wave a pen over a tax bill and get a presidential signature on a proper system that holds all kinds of companies to the same mark.


Edited by Crowley - 6/11/14 at 7:43am

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post #37 of 108
Quote:
Originally Posted by GTR View Post

Interesting fact:

World hunger could be totally eradicated if the United States ALONE were to reduce it's yearly defence budget by 5%.

Not really. See, there are people already trying to feed hungry children in Africa, Asia, India, but the aid workers keep getting murdered, kidnapped, raped or arrested. The only solution to world hunger is education. And that includes realizing that you should not have children if you cannot support them.

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post #38 of 108
Quote:
Originally Posted by mstone View Post

The only solution to world hunger is education. And that includes realizing that you should not have children if you cannot support them.

I agree with mstone, we should euthanize all the uneducated people and their children.

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post #39 of 108
Quote:
Just to be clear then: The EU is not going after Apple. The investigation actually involves how profits are being shifted out of countries where the sales occur and into Ireland/Luxembourg/Netherlands where the taxes that really were due to France, Belgium, Italy and others have somehow been avoided. The EU Commission would seem to believe they have enough initial evidence of improprieties to warrant an official investigation.

Exactly.  The EU is investigating how Ireland helped Apple (and other companies) to evade taxes on the profits made in other EU countries.  If the EU finds that Ireland did not play by the rules, it will impose Ireland to change it tax laws and to collect the avoided taxes, on behalf of the other EU member states

post #40 of 108
This is just another example of a headline create to get attention.

This headline should read as follows

EU investigates Ireland, the Netherlands and Luxembourg breached EU rules on state aid.

This has nothing to do with Apple and if they did find wrong doing it would be on the parts of those counties since we have to assume companies are following the rules of the local government and Apple and the EU commission do not have any sort of business dealing or tax relationship. the EU member has the responsibility to enforce the rules that sign up to.

Keep in mind that Apple and Ireland deals goes back into the 1980's which pre-dates the EU so Apple and Ireland may have a unique deal which the EU may have not authority over and may have been grandfather in.

Now if the headline was about the EU do any you care about this. They stuck in big names to get attention.
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