Hey AI, how many times do people have to tell you that companies pay corporation tax on profits not revenue, before you get it?
I expected them to get that down by now. Suggesting it works that way would give a strange impression with any company that operates at lower margins.
In most states, Best Buy would be required to collect if they have any presence in that state. Otherwise you would owe it directly. This falls under use tax laws in most states, so it is well defined that you are responsible for it. They aren't always strictly enforced, so many people don't report everything. Your notion that Best Buy was responsible is incorrect either way. Don't make assumptions about the way a law should work based on personal ideology.
By the way, this is sufficiently accurate. It mentions the origin of this, which predate the use of the internet as a sales channel.
In some states, this is not how it works. In Texas, the state comptroller doesn't care if a business collected sales tax from their customers. The state basically wants to know the amount of my taxable sales made, and then calculates a straight percentage. The business owner is responsible for paying the tax, not the customer. If a business did not collect sales tax, they are still on the hook for the tax bill.
That being said, why are we even talking about sales tax which is a use tax? Doesn't the Apple/Ireland situation involve tax on corporate profits?
Lots of people making up their own version of the law here. The EU is investigating illegal state aid. It's not illegal to have lower tax rates. You can be competitive against other EU countries. State aid is aiding one company internally at the expense of others. Until recently this was always taken to mean handouts but they have started to investigate lower internal tax breaks. Note that if Ireland had a corporation rate of 2% across all industries that would be legal under European law.
If you are in breach you pay back the state aid. That means Apple pays Ireland.
To to avoid this Apple could repatriate all worldwide revenues in the affected years to the US, which does claim those taxes are retrospectively owed, if it pays the US it doesn't owe Ireland. The US should use this potential ruling to give a tax holiday (exactly 12.5%) to all US companies.
Ireland can't foot the bill. The whole point of this exercise, which almost no one seems to get, is the idea that there is a suspicion that Ireland gave Apple, and probably some other companies as well, an unfair advantage over their rivals by not collecting 12.5% of their profits. The only way to redress that unfair advantage is for Ireland to collect the taxes that they should have collected in the first place. There is no fine payable to the EU or taxes to be forwarded to the EU. There is no 'bill' to foot.
OK, so let's see if I can explain this on a MUCH smaller scale.
I'm looking to buy a new iPad Pro and after looking around the internet, I find one for $800 with no tax because the business doesn't have a brick & mortar store in my state and with free shipping, but it won't be here for 2 weeks. I then walk into my local Best Buy and they have the same iPad Pro for $750 + 12.5% tax for a total of $843.75. I let the store manager know that I can get it for less online and he says he'll match their offer -- pay him $800 out the door and he'll take care of the taxes and I get it immediately instead of waiting 2 weeks. Anybody else that didn't look online is going to be stuck with paying $843.75.
Ten years later, the government finds out that Best Buy broke the rules and didn't make me pay taxes? Who should pay the tax bill and for how much? Should the taxes due be based on the original $750 price, on the $800 I paid total or maybe they lowered the price down to $711.11 and I owe no taxes at all? Should the government come after me because I knew I might be breaking the rules (maybe he lowered the cost and payed the taxes due or maybe he charged $800 and didn't pay any taxes on it) or go after Best Buy because they agreed to break the rules?
I'd argue that I took the best deal and Best Buy has to pay the taxes. If Best Buy doesn't have the money to pay the taxes, that's their problem, not mine. Best Buy incentivized me to do business with them instead of online in the same way Ireland incentivized Apple to do business with them instead of another country.
Dennis
There is a fundamental difference between sales tax and corporate profit tax. Sales tax is part of the selling process and is paid by the buyer immediately when he buys the product. When the seller defines the selling price of a single product, the selling tax is taken into account. Corporate profit tax is only calculated after the facts and it incorporates the profit/loss of all products of a company, its acquisitions, its depreciation, income from minority stakes, ... One typically pays the corporate profit taxes on 2015 income only in 2016. As such the correlation between the selling price of the product and the corporate tax is very low and it is very hard for companies to anticipate the expected corporate tax in the selling price of a product. It is very similar to a dividends paid to the shareholder, only it is paid to the government. It does not impact the selling price of the current products, but it lowers the capacity to spend e.g. R&D money for future products Your story does not make sense from a financial perspective.
As much as I like Apple, their tax policy sucks. It's time to cough up, pay your bill and be a good citizen.
Apple doesn't set tax policy anywhere. They payed their exact fair bill, owed according to Irish law.
So sorry 'dude', next time be a good citizen and try a little reading comprehension.
Why should we have comprehension? Apple was only prepared to set its European HQ in Ireland after a very long negotiation with the Irish tax administration. A custom deal was made so Apple had to pay only 1.5% iso 12.5% corporate profit tax. This did not happen out of the blue, Apple used its power as a large company to force such a deal. Both Apple and the Irish government were well aware of the risk they were taken: the EU could kill the deal because it could be seen as illegal state aid from Ireland to Apple. It is fair that Apple pays its normal share like any other company (mine included). The CFO is just arrogant, and looking at the comments here, he is getting away with it
Lots of people making up their own version of the law here. The EU is investigating illegal state aid. It's not illegal to have lower tax rates. You can be competitive against other EU countries. State aid is aiding one company internally at the expense of others. Until recently this was always taken to mean handouts but they have started to investigate lower internal tax breaks. Note that if Ireland had a corporation rate of 2% across all industries that would be legal under European law.
If you are in breach you pay back the state aid. That means Apple pays Ireland.
To to avoid this Apple could repatriate all worldwide revenues in the affected years to the US, which does claim those taxes are retrospectively owed, if it pays the US it doesn't owe Ireland. The US should use this potential ruling to give a tax holiday (exactly 12.5%) to all US companies.
Be be a nice little earner, for president Trump.
If Apple's deal with Ireland over tax is found to be against EU rules on illegal state aid. Apple would have to pay back what is owed. It would be irrelevant if they repatriated the money before any ruling and the US government took their cut they would still be faced with the bill to pay in Ireland. Also it would be a huge risk to repatriate before any ruling as they may be found to have no liability but then would be forced to pay the additional liability. IMHO Apple will wait until the ruling and if it goes against them try and win on appeal via Ireland, failing that try and negotiate a sum owed like Google did with the uk government which is as low as they can get it.. In effect they could lose but pay a token sum eg hundreds of millions instead of billions.
Lots of people making up their own version of the law here. The EU is investigating illegal state aid. It's not illegal to have lower tax rates. You can be competitive against other EU countries. State aid is aiding one company internally at the expense of others. Until recently this was always taken to mean handouts but they have started to investigate lower internal tax breaks. Note that if Ireland had a corporation rate of 2% across all industries that would be legal under European law.
If you are in breach you pay back the state aid. That means Apple pays Ireland.
To to avoid this Apple could repatriate all worldwide revenues in the affected years to the US, which does claim those taxes are retrospectively owed, if it pays the US it doesn't owe Ireland. The US should use this potential ruling to give a tax holiday (exactly 12.5%) to all US companies.
Be be a nice little earner, for president Trump.
If Apple's deal with Ireland over tax is found to be against EU rules on illegal state aid. Apple would have to pay back what is owed. It would be irrelevant if they repatriated the money before any ruling and the US government took their cut they would still be faced with the bill to pay in Ireland. Also it would be a huge risk to repatriate before any ruling as they may be found to have no liability but then would be forced to pay the additional liability. IMHO Apple will wait until the ruling and if it goes against them try and win on appeal via Ireland, failing that try and negotiate a sum owed like Google did with the uk government which is as low as they can get it.. In effect they could lose but pay a token sum eg hundreds of millions instead of billions.
No. This is about unfair competition. You can't redress that by a negotiated lesser amount, the EU wouldn't allow that as the core issue of Apple being in receipt of a subsidy would still exist.
If Apple's deal with Ireland over tax is found to be against EU rules on illegal state aid. Apple would have to pay back what is owed. It would be irrelevant if they repatriated the money before any ruling and the US government took their cut they would still be faced with the bill to pay in Ireland. Also it would be a huge risk to repatriate before any ruling as they may be found to have no liability but then would be forced to pay the additional liability. IMHO Apple will wait until the ruling and if it goes against them try and win on appeal via Ireland, failing that try and negotiate a sum owed like Google did with the uk government which is as low as they can get it.. In effect they could lose but pay a token sum eg hundreds of millions instead of billions.
No. This is about unfair competition. You can't redress that by a negotiated lesser amount, the EU wouldn't allow that as the core issue of Apple being in receipt of a subsidy would still exist.
If Apple's deal with Ireland over tax is found to be against EU rules on illegal state aid. Apple would have to pay back what is owed. It would be irrelevant if they repatriated the money before any ruling and the US government took their cut they would still be faced with the bill to pay in Ireland. Also it would be a huge risk to repatriate before any ruling as they may be found to have no liability but then would be forced to pay the additional liability. IMHO Apple will wait until the ruling and if it goes against them try and win on appeal via Ireland, failing that try and negotiate a sum owed like Google did with the uk government which is as low as they can get it.. In effect they could lose but pay a token sum eg hundreds of millions instead of billions.
No. This is about unfair competition. You can't redress that by a negotiated lesser amount, the EU wouldn't allow that as the core issue of Apple being in receipt of a subsidy would still exist.
My thoughts on any potential negotiations is that as any liability would be hampered by the extreme complexity of tax arrangements in Europe is that the actual amount that would be calculated would fluctuate depending on potentially huge amount of variables. This doesn't preclude a set amount being asigned. I have seen estimations varying between 9 billion to a totally eye watering 19 billion.
No. This is about unfair competition. You can't redress that by a negotiated lesser amount, the EU wouldn't allow that as the core issue of Apple being in receipt of a subsidy would still exist.
My thoughts on any potential negotiations is that as any liability would be hampered by the extreme complexity of tax arrangements in Europe is that the actual amount that would be calculated would fluctuate depending on potentially huge amount of variables. This doesn't preclude a set amount being asigned. I have seen estimations varying between 9 billion to a totally eye watering 19 billion.
No wonder Europe had two Workd Wars over there. What a cluster-f--k of disjointed and imbalanced interests.
No. This is about unfair competition. You can't redress that by a negotiated lesser amount, the EU wouldn't allow that as the core issue of Apple being in receipt of a subsidy would still exist.
My thoughts on any potential negotiations is that as any liability would be hampered by the extreme complexity of tax arrangements in Europe is that the actual amount that would be calculated would fluctuate depending on potentially huge amount of variables. This doesn't preclude a set amount being asigned. I have seen estimations varying between 9 billion to a totally eye watering 19 billion.
That's possible. My take on the Eu Competition commissioner taking so long on this is they are trying to work out the amount and will basically set the amount to be repaid in their report. It really shouldn't be terribly difficult or complex. For each year Apple have paid tax under the 'deal', take the amount they paid Ireland and multiply it by 525% and just add them up.
Lots of people making up their own version of the law here. The EU is investigating illegal state aid. It's not illegal to have lower tax rates. You can be competitive against other EU countries. State aid is aiding one company internally at the expense of others. Until recently this was always taken to mean handouts but they have started to investigate lower internal tax breaks. Note that if Ireland had a corporation rate of 2% across all industries that would be legal under European law.
If you are in breach you pay back the state aid. That means Apple pays Ireland.
To to avoid this Apple could repatriate all worldwide revenues in the affected years to the US, which does claim those taxes are retrospectively owed, if it pays the US it doesn't owe Ireland. The US should use this potential ruling to give a tax holiday (exactly 12.5%) to all US companies.
Be be a nice little earner, for president Trump.
If Apple's deal with Ireland over tax is found to be against EU rules on illegal state aid. Apple would have to pay back what is owed. It would be irrelevant if they repatriated the money before any ruling and the US government took their cut they would still be faced with the bill to pay in Ireland. Also it would be a huge risk to repatriate before any ruling as they may be found to have no liability but then would be forced to pay the additional liability. IMHO Apple will wait until the ruling and if it goes against them try and win on appeal via Ireland, failing that try and negotiate a sum owed like Google did with the uk government which is as low as they can get it.. In effect they could lose but pay a token sum eg hundreds of millions instead of billions.
Because of double taxation rules, they won't owe the money in Ireland were it paid in the US.
The reporting of the Google taxation issue in the UK is the most financially illiterate reporting evah.
My thoughts on any potential negotiations is that as any liability would be hampered by the extreme complexity of tax arrangements in Europe is that the actual amount that would be calculated would fluctuate depending on potentially huge amount of variables. This doesn't preclude a set amount being asigned. I have seen estimations varying between 9 billion to a totally eye watering 19 billion.
No wonder Europe had two Workd Wars over there. What a cluster-f--k of disjointed and imbalanced interests.
The world wars were everywhere, though., hence the name And Ireland wasn't even in the second one.
If Apple's deal with Ireland over tax is found to be against EU rules on illegal state aid. Apple would have to pay back what is owed. It would be irrelevant if they repatriated the money before any ruling and the US government took their cut they would still be faced with the bill to pay in Ireland. Also it would be a huge risk to repatriate before any ruling as they may be found to have no liability but then would be forced to pay the additional liability. IMHO Apple will wait until the ruling and if it goes against them try and win on appeal via Ireland, failing that try and negotiate a sum owed like Google did with the uk government which is as low as they can get it.. In effect they could lose but pay a token sum eg hundreds of millions instead of billions.
Because of double taxation rules, they won't owe the money in Ireland were it paid in the US.
The reporting of the Google taxation issue in the UK is the most financially illiterate reporting evah.
Is that double taxation rules in the US or in Ireland? As if in the hypothetical situation they lost the ruling but had moved the money to the US they would still be liable to pay back to Ireland regardless of anything they had paid to the US. Though they'd probably be due one hell of a rebate from the US government!
Where did they start? Where were they fought? What started them? Yup, that's what I thought. Thanks.
My father was in the war and told of how the flying boat he was on, landed on the river at Foynes and refueled before continuing on to the Uk, on a trip back from Africa.
Ireland encouraged corporations to bring business to Ireland with favourable tax laws. Apple brought business to Ireland. If the EU determines that Ireland's laws are too favourable, and are unfair to other EU members, then EU can put pressure on Ireland and Ireland may be forced to change its future tax relationship with Apple and all the other businesses who did the same as Apple. If Ireland tries to penalise those companies for responding to the incentives Ireland provided, Ireland will undo all the work they've done bringing multinationals to Ireland.
Ireland encouraged corporations to bring business to Ireland with favourable tax laws. Apple brought business to Ireland. If the EU determines that Ireland's laws are too favourable, and are unfair to other EU members, then EU can put pressure on Ireland and Ireland may be forced to change its future tax relationship with Apple and all the other businesses who did the same as Apple. If Ireland tries to penalise those companies for responding to the incentives Ireland provided, Ireland will undo all the work they've done bringing multinationals to Ireland.
This isn't about Ireland's tax rules being too lenient it's about whether Ireland offered a tax deal to Apple that was available to others and being classed as state aid against EU law.
I think I'd dismiss this clown for such an embarrassing lack of diplomacy.
Ha! Are you kidding? This is what every high level executive and member of their board of directors should be very publicly screaming to the press! Laws are made by people, they are not created by divine intervention. Therefore, Apple needs to very publicly and forcefully exert their influence. Especially because they're right!
Comments
That being said, why are we even talking about sales tax which is a use tax? Doesn't the Apple/Ireland situation involve tax on corporate profits?
So sorry 'dude', next time be a good citizen and try a little reading comprehension.
If you are in breach you pay back the state aid. That means Apple pays Ireland.
To to avoid this Apple could repatriate all worldwide revenues in the affected years to the US, which does claim those taxes are retrospectively owed, if it pays the US it doesn't owe Ireland. The US should use this potential ruling to give a tax holiday (exactly 12.5%) to all US companies.
Be be a nice little earner, for president Trump.
Corporate profit tax is only calculated after the facts and it incorporates the profit/loss of all products of a company, its acquisitions, its depreciation, income from minority stakes, ... One typically pays the corporate profit taxes on 2015 income only in 2016. As such the correlation between the selling price of the product and the corporate tax is very low and it is very hard for companies to anticipate the expected corporate tax in the selling price of a product. It is very similar to a dividends paid to the shareholder, only it is paid to the government. It does not impact the selling price of the current products, but it lowers the capacity to spend e.g. R&D money for future products
Your story does not make sense from a financial perspective.
Apple was only prepared to set its European HQ in Ireland after a very long negotiation with the Irish tax administration. A custom deal was made so Apple had to pay only 1.5% iso 12.5% corporate profit tax. This did not happen out of the blue, Apple used its power as a large company to force such a deal. Both Apple and the Irish government were well aware of the risk they were taken: the EU could kill the deal because it could be seen as illegal state aid from Ireland to Apple.
It is fair that Apple pays its normal share like any other company (mine included). The CFO is just arrogant, and looking at the comments here, he is getting away with it
IMHO Apple will wait until the ruling and if it goes against them try and win on appeal via Ireland, failing that try and negotiate a sum owed like Google did with the uk government which is as low as they can get it..
In effect they could lose but pay a token sum eg hundreds of millions instead of billions.
The reporting of the Google taxation issue in the UK is the most financially illiterate reporting evah.
The world wars were everywhere, though., hence the name And Ireland wasn't even in the second one.
As if in the hypothetical situation they lost the ruling but had moved the money to the US they would still be liable to pay back to Ireland regardless of anything they had paid to the US. Though they'd probably be due one hell of a rebate from the US government!