EU ruling over $14 billion Apple tax bill could be overturned, suggests Irish tax advisor

Posted:
in AAPL Investors edited January 2017
The European Commission's order for Apple to pay Ireland 13 billion euros ($14 billion) in back taxes is an overreach of power, with PricewaterhouseCoopers' head of Irish tax matters Feargal O'Rourke claiming the move is tantamount to a "land grab."




In a discussion at the Irish Times corporation tax summit, Mr O'Rourke insisted the Commission had gone beyond its remit to demand repayment of taxes from Apple. Declaring the ruling for retrieving the money was "ill-judged," O'Rourke warns the regulator "Doing it by ignoring the law is not the way to do it."

O'Rourke believes the Irish government was correct in challenging the repayment ruling, insisting that no-one who was familiar with the details of the case could believe the money actually belongs to Ireland. He is also confident that the Commission's decision to demand repayment would be overturned if it was brought in front of the European Court of Justice, providing the ruling isn't politicized.

Aside from his position at PricewaterhouseCoopers, O'Rourke is also an advisor to the Irish government, assisting in the creation of incentives that help convince multinational organizations to operate in the country.

The Irish government's handling of the Apple tax case may also have a bearing on future investment, with O'Rourke advising of considerable international focus on the ruling. He suggests that, while Ireland has a stable tax environment and a low tax rate that makes the country attractive to major businesses, the Commission's interference with arrangements between Ireland and Apple may threaten this stability.

The investigation into Apple's tax affairs in Ireland ended in August last year, with the Commission claiming tax rates on Apple's European profits were illegally low, down to 0.005 percent in 2014 and 1 percent in 2003. Ireland was accused of granting "illegal tax benefits" to Apple, and had been "reverse engineered" on the fly to guarantee a minimal tax bill as time progressed.

Both Apple and Ireland are contesting the ruling, with the Irish government "fundamentally disagreeing" with the findings and resisting the back tax repayments. Apple claims the European Union "took unilateral action and changed the rules, disregarding decades of Irish tax law, U.S. Tax law, as well as global consensus on tax policy."

In December, Apple CEO Tim Cook and other high-level executives were invited to Ireland to discuss the ruling and future action. Cook declined to attend, with Apple citing the legal complexity of the case behind his refusal, a move that Irish politicians considered to be a "snub to Irish people."

Comments

  • Reply 1 of 14
    gwydiongwydion Posts: 1,083member
    Shocking, an advisor for one of the interested parts says that the ruling could be overturned in benefit of the part he is advisor.

    singularityslprescottavon b7
  • Reply 2 of 14
    "Aside from his position at PricewaterhouseCoopers, O'Rourke is also an advisor to the Irish government, assisting in the creation of incentives that help convince multinational organizations to operate in the country. "

    Shock! An advisor who is paid (probably handsomly) to devise these deals argues in their favour? Get out of here! 
    :p 
  • Reply 3 of 14
    gwydiongwydion Posts: 1,083member
    sog35 said:
    gwydion said:
    Shocking, an advisor for one of the interested parts says that the ruling could be overturned in benefit of the part he is advisor.

    or it could be common sense that you can't change laws on things that happenned 10 years ago
    No law was changed
    gatorguysingularityavon b7SpamSandwich
  • Reply 4 of 14
    eightzeroeightzero Posts: 2,610member
    I smell a Trump intervention coming.
  • Reply 5 of 14
    nhtnht Posts: 4,516member
    eightzero said:
    I smell a Trump intervention coming.
    You would hope so...
  • Reply 6 of 14
    gatorguygatorguy Posts: 22,826member
    sog35 said:
    gwydion said:
    sog35 said:
    gwydion said:
    Shocking, an advisor for one of the interested parts says that the ruling could be overturned in benefit of the part he is advisor.

    or it could be common sense that you can't change laws on things that happenned 10 years ago
    No law was changed
    Yes it was. If it wasn't the EU would have charged Apple 10 years ago
    No, it really wasn't. The Irish agreement was an exception to the standard corporate tax laws even if it was an allowable one. and while the EU's interpretation of the competition laws to deem them applicable to Apple's tax situation might be new, the laws themselves aren't. 
    gwydion
  • Reply 7 of 14
    gwydiongwydion Posts: 1,083member
    sog35 said:
    gwydion said:
    sog35 said:
    gwydion said:
    Shocking, an advisor for one of the interested parts says that the ruling could be overturned in benefit of the part he is advisor.

    or it could be common sense that you can't change laws on things that happenned 10 years ago
    No law was changed
    Yes it was. If it wasn't the EU would have charged Apple 10 years ago
    It is good to know about the case before commenting on it.
    The EU knew about that deal in 2014 when Tim Cook testified before the congress.
    edited January 2017 gatorguy
  • Reply 8 of 14
    gatorguy said:
    sog35 said:
    gwydion said:
    sog35 said:
    gwydion said:
    Shocking, an advisor for one of the interested parts says that the ruling could be overturned in benefit of the part he is advisor.

    or it could be common sense that you can't change laws on things that happenned 10 years ago
    No law was changed
    Yes it was. If it wasn't the EU would have charged Apple 10 years ago
    No, it really wasn't. The Irish agreement was an exception to the standard corporate tax laws even if it was an allowable one. and while the EU's interpretation of the competition laws to deem them applicable to Apple's tax situation might be new, the laws themselves aren't. 

    There is no agreement between Apple & Ireland.

    Any multinational company could adopt a similar structure and achieve a somewhat similar tax result (its easier for a company selling goods (e.g. Apple), versus a company selling locally delivered services (like IBM or HP enterprise)

    That is not acceptable, and the EU is right to want to change that situation , but they arguably don't have the legal authority to impose the outcome they are attempting to in this case (if Apple had an agreed exception to normal Irish tax law, they would have the leverage).

    This is primarily a US company issue as the US is almost unique globally in that it attempts to tax company revenue regardless of where it was generated in the world. In Apple's case , goods made in country C, and sold in country B, are being assessed by country A as needing to have their profit being taxed in country A.

    Apple has adopted a structure that gives it control of when it repatriates those profits to country A, and therefore when it pays tax on it.

    What that means it that taxable income sits in offshore limbo, effectively paying no tax anywhere, until the US declares a tax holiday and it is repatriated.

    Thus whole issue goes away if the US corporate tax rate is lowered , or the US enters into multi-lateral taxation agreements with other countries broadly (as many other countries have done), or the OECD comes up with some other option that the US signs on to (e.g. Adopting a convention bas d on concepts such as tax should be paid at point of revenue generation - i.e. where the finished goods are sold)

    Tbe US government has refused to deal with this issue for 50+ years, other than congress voting about 3 times for tax holidays (which is really just kicking the can down the road).

    The Trump "solution" will likely be lower US taxes, and possibly also declare a tax holiday. That's probably the worst of the 3 alternative options, but at least it's doing something.

    smiffy31randominternetpersonmwhiteration alRayz2016SpamSandwich
  • Reply 9 of 14
    gwydiongwydion Posts: 1,083member
    uroshnor said:
    gatorguy said:
    sog35 said:
    gwydion said:
    sog35 said:
    gwydion said:
    Shocking, an advisor for one of the interested parts says that the ruling could be overturned in benefit of the part he is advisor.

    or it could be common sense that you can't change laws on things that happenned 10 years ago
    No law was changed
    Yes it was. If it wasn't the EU would have charged Apple 10 years ago
    No, it really wasn't. The Irish agreement was an exception to the standard corporate tax laws even if it was an allowable one. and while the EU's interpretation of the competition laws to deem them applicable to Apple's tax situation might be new, the laws themselves aren't. 

    There is no agreement between Apple & Ireland.

    No, there was an agreement between Apple and the Irish government about the amount of revenues that could be alocated to Ireland
    singularity
  • Reply 10 of 14
    gatorguygatorguy Posts: 22,826member
    uroshnor said:
    gatorguy said:
    sog35 said:
    gwydion said:
    sog35 said:
    gwydion said:
    Shocking, an advisor for one of the interested parts says that the ruling could be overturned in benefit of the part he is advisor.

    or it could be common sense that you can't change laws on things that happenned 10 years ago
    No law was changed
    Yes it was. If it wasn't the EU would have charged Apple 10 years ago
    No, it really wasn't. The Irish agreement was an exception to the standard corporate tax laws even if it was an allowable one. and while the EU's interpretation of the competition laws to deem them applicable to Apple's tax situation might be new, the laws themselves aren't. 

    There is no agreement between Apple & Ireland.

    Sorry, but for you to believe that you simply aren't familiar with the facts. Even Apple's own testimony to the US Senate notes the existence of those agreements. Do more reading. 
    SpamSandwich
  • Reply 11 of 14
    crowleycrowley Posts: 7,620member
    Can't believe some people still claim that law has been changed and the Apple don't have a special deal, after this has been talked about for months and there is clear testimony to the contrary.

    The law hasn't changed.
    Apple had a special arrangement with Ireland.

    Actual facts.
    singularitySpamSandwich
  • Reply 12 of 14
    avon b7avon b7 Posts: 5,673member
    There definitely was an agreement but many moons ago and I'm sure it was documented to.some extent somewhere. The problem is that that will be few people at Apple that actually remember what was agreed and in what context. The deal was with a vastly different Apple to the Apple of today.

    Apple is on dodgy moral ground as it really should have revised their practices long ago and updated the agreement.

    Effectively allowing yourself to decide how much you 'make available' for taxation is dubious from the outset. Actually paying a ridiculously tiny percentage on that amount just makes matters worse.
  • Reply 13 of 14
    ... He is also confident that the Commission's decision to demand repayment would be overturned if it was brought in front of the European Court of Justice, providing the ruling isn't politicized.
    ...
    Is he already preparing for some alternative facts if the ruling doesn't get overturned?
    SpamSandwich
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