Apple & Ireland 'close to deal' to protect government from losses while holding $17.7B in ...

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Apple and the Irish government are reportedly nearing a deal that would shield the latter from losses incurred while holding up to $17.7 billion in Apple cash, including interest -- money that may be due in back taxes following a 2016 European Commission ruling.




Even if the government ultimately returns the money to Apple, it wants to be sure it isn't liable for any drops in value, Bloomberg said on Friday. One of two sources for the publication indicated that an agreement could come within the next few weeks.

Ireland is well behind schedule in collecting the money. The original deadline was Jan. 3 -- by May, the Commission was warning that the country could end up in court. In July the Irish government said it was still finalizing arrangements.

In August 2016, the Commission ruled that Ireland had offered "illegal tax benefits" to Apple, which it also said had been "reverse engineered" to ensure they stayed low. The company is estimated to have paid 1 percent in 2003, and as little as 0.005 percent in 2014 -- despite using the country to funnel billions in international revenue.

The decision was immediately met with stiff opposition by Apple, Ireland, and the U.S. government. An Irish appeal is currently underway, but could take as long as five years, and may still be unsuccessful.

"We continue to cooperate with Ireland on the recovery process the commission has mandated but remain confident that once the General Court of the EU has reviewed all the evidence it will overturn the commission's decision," Apple said in a statement on Friday.

In recent years the European Commission has attempted to crack down on multinational corporations exploiting tax loopholes -- a serious issue given both budget shortfalls and E.U. law, which stipulates that governments can't extend breaks to some companies but not others. Apple has insisted that it's simply following regulations.
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Comments

  • Reply 1 of 22
    lkrupplkrupp Posts: 6,782member
    The European Commission created the loopholes and what, they expected corporations not to exploit them? Much like the U.S. tax code, these policies are full of holes and escape hatches put there by the politicians. Then when the light is shined on them those same politicians scramble to “crack down” on the very loopholes they put there in the first place. And please, don’t make yourself look stupid by blathering about ‘fairness’ and using terms like ‘tax evasion.’ If it’s legal it’s not tax evasion. It means you have very smart accountants. 
    mwhiteSoliphbianmacxpressbaconstangwatto_cobra
  • Reply 2 of 22
    avon b7avon b7 Posts: 3,443member
    Well, if it's a loophole, it's probably an open and shut case, but if the EU decision wasn't part of a loophole, that's a completely different story.

  • Reply 3 of 22
    Roger_FingasRoger_Fingas Posts: 124member, editor
    lkrupp said:
    The European Commission created the loopholes and what, they expected corporations not to exploit them? Much like the U.S. tax code, these policies are full of holes and escape hatches put there by the politicians. Then when the light is shined on them those same politicians scramble to “crack down” on the very loopholes they put there in the first place. And please, don’t make yourself look stupid by blathering about ‘fairness’ and using terms like ‘tax evasion.’ If it’s legal it’s not tax evasion. It means you have very smart accountants. 
    It's not the Commission that created the loopholes, it's individual countries like Ireland.
    gatorguyjony0
  • Reply 4 of 22
    PekoePekoe Posts: 5member
    It is clear to any reasonable person that Apple owes these taxes.  I wish that Apple (as the most valuable company in the world) would set a good example, and pay its fair share of taxes in the European Union, the USA, and around the world.  
    gatorguyavon b7
  • Reply 5 of 22
    boltsfan17boltsfan17 Posts: 2,157member
    Pekoe said:
    It is clear to any reasonable person that Apple owes these taxes.  I wish that Apple (as the most valuable company in the world) would set a good example, and pay its fair share of taxes in the European Union, the USA, and around the world.  
    Set a good example? Seriously? Apple does pay its fair share of taxes under the accordance of laws in countries they operate in around the world. 
    baconstangjony0watto_cobra
  • Reply 6 of 22
    jd_in_sbjd_in_sb Posts: 1,483member
    An Irexit would solve this problem. Apple pays full tax as required. It's not a crime for Apple to obey Irish tax law and pay a low rate. 
  • Reply 7 of 22
    avon b7avon b7 Posts: 3,443member
    Pekoe said:
    It is clear to any reasonable person that Apple owes these taxes.  I wish that Apple (as the most valuable company in the world) would set a good example, and pay its fair share of taxes in the European Union, the USA, and around the world.  
    Set a good example? Seriously? Apple does pay its fair share of taxes under the accordance of laws in countries they operate in around the world. 
    That is what Apple claims too, but as a result of the EU investigation, this was squarely called into doubt.

    With a little patience we will see if Apple paid it's fair share or not but the EU press release had this to say:

    "In fact, this selective treatment allowed Apple to pay an effective corporate tax rate of 1 per cent on its European profits in 2003 down to 0.005 per cent in 2014."

    I'm not sure if that constitutes 'fair share' in most folks' minds.

    But then Apple countered with the claim that there were fundamental flaws in the work of the EU.

    The only option now is to wait.
  • Reply 8 of 22
    steven n.steven n. Posts: 1,108member
    I will fix this sentence:
    FROM
    "In recent years the European Commission has attempted to crack down on multinational corporations exploiting tax loopholes"

    TO
    "In recent years the European Commission has attempted to crack down on multinational corporations following tax laws."
    radarthekatbaconstangjony0
  • Reply 9 of 22
    jd_in_sbjd_in_sb Posts: 1,483member
    steven n. said:
    I will fix this sentence:
    FROM
    "In recent years the European Commission has attempted to crack down on multinational corporations exploiting tax loopholes"

    TO
    "In recent years the European Commission has attempted to crack down on multinational corporations following tax laws."
    Exactly. Thank you. 
    watto_cobra
  • Reply 10 of 22
    SpamSandwichSpamSandwich Posts: 30,836member
    Tax rates are arbitrary anyway. There were no tax "losses" involved here. 

    Were people dying in the streets because Apple had this deal, lo these many years? I don't think so. People in Ireland received the benefit of Apple being in their territory and Apple received the benefit of their tax arrangement.
    watto_cobra
  • Reply 11 of 22
    MarvinMarvin Posts: 14,208moderator
    Tax rates are arbitrary anyway. There were no tax "losses" involved here. 

    Were people dying in the streets because Apple had this deal, lo these many years? I don't think so. People in Ireland received the benefit of Apple being in their territory and Apple received the benefit of their tax arrangement.
    The rates aren't completely arbitrary, they are weighed up against the public need: number of older people in retirement, number of people needing healthcare, military budgets, unemployment, infrastructure costs. The costs vary based on the population of a country, which is why companies prefer to declare taxes in low population countries. Ireland has around half the population of London, their budget is ~58b euros (~12k euros per person). Apple makes close to that in net income every year. With a 25% rate, they'd cover around 1/4 of Ireland's entire budget on their own so Ireland doesn't need this amount from them.

    However, Ireland's budget is not the issue because only a tiny fraction of the income was made in Ireland. There's a vast amount of infrastructure, services, employees across all the countries where Apple does business, which they have used in order to conduct their business safely and effectively. You can compare this to developing countries where that infrastructure doesn't exist and doing business there is much harder. Those countries have tax rates that are based on those infrastructure costs. When companies don't pay their share of it and instead find ways to funnel it back to shareholders, the cost becomes a budget deficit and is displaced onto the working classes. The result is retirement ages go up, sometimes taxes are adjusted and it lowers quality of life for people, while furthering the gap between different income groups.

    It's not a burden to Apple to pay the expected rates in other countries just as they do in the US, they are the wealthiest company in the world by a pretty wide margin and they agreed to each country's tax rates when they started doing business. If a company doesn't agree to the rates then they don't do business there instead of benefiting from it and skipping out when the bill arrives.
    propodgatorguywatto_cobra
  • Reply 12 of 22
    Closing the loopholes is probably a good plan, but sending Ireland a bill simply because it's apparent that Apple could afford it is not really a plan
    watto_cobra
  • Reply 13 of 22
    wigbywigby Posts: 688member
    avon b7 said:
    Pekoe said:
    It is clear to any reasonable person that Apple owes these taxes.  I wish that Apple (as the most valuable company in the world) would set a good example, and pay its fair share of taxes in the European Union, the USA, and around the world.  
    Set a good example? Seriously? Apple does pay its fair share of taxes under the accordance of laws in countries they operate in around the world. 
    That is what Apple claims too, but as a result of the EU investigation, this was squarely called into doubt.

    With a little patience we will see if Apple paid it's fair share or not but the EU press release had this to say:

    "In fact, this selective treatment allowed Apple to pay an effective corporate tax rate of 1 per cent on its European profits in 2003 down to 0.005 per cent in 2014."

    I'm not sure if that constitutes 'fair share' in most folks' minds.

    But then Apple countered with the claim that there were fundamental flaws in the work of the EU.

    The only option now is to wait.
    So if a sovereign state told you to pay only 1% tax rate, you wouldn't because it wouldn't seem fair? Apple pays more tax than any other company in the U.S..Must they do the same in the rest of the world or should they abide by the laws of the land to seek out tax breaks? And why should they pay more than any other large corporations doing the same thing overseas? 
    baconstangwatto_cobra
  • Reply 14 of 22
    wigbywigby Posts: 688member

    Marvin said:
    Tax rates are arbitrary anyway. There were no tax "losses" involved here. 

    Were people dying in the streets because Apple had this deal, lo these many years? I don't think so. People in Ireland received the benefit of Apple being in their territory and Apple received the benefit of their tax arrangement.
    The rates aren't completely arbitrary, they are weighed up against the public need: number of older people in retirement, number of people needing healthcare, military budgets, unemployment, infrastructure costs. The costs vary based on the population of a country, which is why companies prefer to declare taxes in low population countries. Ireland has around half the population of London, their budget is ~58b euros (~12k euros per person). Apple makes close to that in net income every year. With a 25% rate, they'd cover around 1/4 of Ireland's entire budget on their own so Ireland doesn't need this amount from them.

    However, Ireland's budget is not the issue because only a tiny fraction of the income was made in Ireland. There's a vast amount of infrastructure, services, employees across all the countries where Apple does business, which they have used in order to conduct their business safely and effectively. You can compare this to developing countries where that infrastructure doesn't exist and doing business there is much harder. Those countries have tax rates that are based on those infrastructure costs. When companies don't pay their share of it and instead find ways to funnel it back to shareholders, the cost becomes a budget deficit and is displaced onto the working classes. The result is retirement ages go up, sometimes taxes are adjusted and it lowers quality of life for people, while furthering the gap between different income groups.

    It's not a burden to Apple to pay the expected rates in other countries just as they do in the US, they are the wealthiest company in the world by a pretty wide margin and they agreed to each country's tax rates when they started doing business. If a company doesn't agree to the rates then they don't do business there instead of benefiting from it and skipping out when the bill arrives.
    So if Apple wasn't the wealthiest company in the world it would be a burden? What if they were losing money and going bankrupt? You're letting a bias coerce you. Should rich people pay more than their "fair share" just because they're rich or should they pay what they are legally required to pay?
  • Reply 15 of 22
    avon b7avon b7 Posts: 3,443member
    wigby said:
    avon b7 said:
    Pekoe said:
    It is clear to any reasonable person that Apple owes these taxes.  I wish that Apple (as the most valuable company in the world) would set a good example, and pay its fair share of taxes in the European Union, the USA, and around the world.  
    Set a good example? Seriously? Apple does pay its fair share of taxes under the accordance of laws in countries they operate in around the world. 
    That is what Apple claims too, but as a result of the EU investigation, this was squarely called into doubt.

    With a little patience we will see if Apple paid it's fair share or not but the EU press release had this to say:

    "In fact, this selective treatment allowed Apple to pay an effective corporate tax rate of 1 per cent on its European profits in 2003 down to 0.005 per cent in 2014."

    I'm not sure if that constitutes 'fair share' in most folks' minds.

    But then Apple countered with the claim that there were fundamental flaws in the work of the EU.

    The only option now is to wait.
    So if a sovereign state told you to pay only 1% tax rate, you wouldn't because it wouldn't seem fair? Apple pays more tax than any other company in the U.S..Must they do the same in the rest of the world or should they abide by the laws of the land to seek out tax breaks? And why should they pay more than any other large corporations doing the same thing overseas? 
    But that isn't the case. That sovereign state is part of the largest trading bloc in the world and competition rules exist that that sovereign state has agreed to.

    Now, if most of my sales in that bloc were made in other countries of the bloc but simply channelled through through one of its sovereign states which is offering me an effective tax rate of 0.005 and I could choose how much I could make available for taxation in the first place (something none of the other companies that only operate out of Ireland can do), I would think very hard about accepting the deal because if the ruling bodies decide to take a peek at you, you could very well end up in shit street AND a face a possible backlash from the public.

    Of course, if I thought I could get away with it, I might not care, but I guess that's what most companies think - until an investigation starts.
  • Reply 16 of 22
    wigby said:

    Marvin said:
    Tax rates are arbitrary anyway. There were no tax "losses" involved here. 

    Were people dying in the streets because Apple had this deal, lo these many years? I don't think so. People in Ireland received the benefit of Apple being in their territory and Apple received the benefit of their tax arrangement.
    The rates aren't completely arbitrary, they are weighed up against the public need: number of older people in retirement, number of people needing healthcare, military budgets, unemployment, infrastructure costs. The costs vary based on the population of a country, which is why companies prefer to declare taxes in low population countries. Ireland has around half the population of London, their budget is ~58b euros (~12k euros per person). Apple makes close to that in net income every year. With a 25% rate, they'd cover around 1/4 of Ireland's entire budget on their own so Ireland doesn't need this amount from them.

    However, Ireland's budget is not the issue because only a tiny fraction of the income was made in Ireland. There's a vast amount of infrastructure, services, employees across all the countries where Apple does business, which they have used in order to conduct their business safely and effectively. You can compare this to developing countries where that infrastructure doesn't exist and doing business there is much harder. Those countries have tax rates that are based on those infrastructure costs. When companies don't pay their share of it and instead find ways to funnel it back to shareholders, the cost becomes a budget deficit and is displaced onto the working classes. The result is retirement ages go up, sometimes taxes are adjusted and it lowers quality of life for people, while furthering the gap between different income groups.

    It's not a burden to Apple to pay the expected rates in other countries just as they do in the US, they are the wealthiest company in the world by a pretty wide margin and they agreed to each country's tax rates when they started doing business. If a company doesn't agree to the rates then they don't do business there instead of benefiting from it and skipping out when the bill arrives.
    So if Apple wasn't the wealthiest company in the world it would be a burden? What if they were losing money and going bankrupt? You're letting a bias coerce you. Should rich people pay more than their "fair share" just because they're rich or should they pay what they are legally required to pay?
    Rich people should pay more of course.  We have a socialized system of production based on privatized property.  Rich people couldn't get rich without exploiting the human labor power of the masses.  They like to think they are single handedly responsible for their wealth but that is objectively false. The less they pay workers the more profit they accumulate, tho this ends up in a contradiction when economies fail because of wide disparities in wealth. To the extent that the government funds socialized services that provide for the public, taxes are a counter to the natural tendency of capitalism to benefit the few at the expense of everyone else.  To the extent rich people fight this and ignore the plight of working people, workers grow restless and foment revolution.  That's the lesson of the 20th centurty.  So the Soviet Union was strangled and defeated.  That hasn't removed the contradictions of capitalism. And with total automation around the corner, capitalism is on its way out anyway.  That they believe value is not based in human labor power is irrelevant.  Austrian economic theory is a justification for an ideology of the wealthy that suits their biases. Even Smith and Ricardo would agree with Marx, who was a classical economist. 
    baconstangMacProgatorguy
  • Reply 17 of 22
    SpamSandwichSpamSandwich Posts: 30,836member
    Marvin said:
    Tax rates are arbitrary anyway. There were no tax "losses" involved here. 

    Were people dying in the streets because Apple had this deal, lo these many years? I don't think so. People in Ireland received the benefit of Apple being in their territory and Apple received the benefit of their tax arrangement.
    The rates aren't completely arbitrary, they are weighed up against the public need: number of older people in retirement, number of people needing healthcare, military budgets, unemployment, infrastructure costs. The costs vary based on the population of a country, which is why companies prefer to declare taxes in low population countries. Ireland has around half the population of London, their budget is ~58b euros (~12k euros per person). Apple makes close to that in net income every year. With a 25% rate, they'd cover around 1/4 of Ireland's entire budget on their own so Ireland doesn't need this amount from them.

    However, Ireland's budget is not the issue because only a tiny fraction of the income was made in Ireland. There's a vast amount of infrastructure, services, employees across all the countries where Apple does business, which they have used in order to conduct their business safely and effectively. You can compare this to developing countries where that infrastructure doesn't exist and doing business there is much harder. Those countries have tax rates that are based on those infrastructure costs. When companies don't pay their share of it and instead find ways to funnel it back to shareholders, the cost becomes a budget deficit and is displaced onto the working classes. The result is retirement ages go up, sometimes taxes are adjusted and it lowers quality of life for people, while furthering the gap between different income groups.

    It's not a burden to Apple to pay the expected rates in other countries just as they do in the US, they are the wealthiest company in the world by a pretty wide margin and they agreed to each country's tax rates when they started doing business. If a company doesn't agree to the rates then they don't do business there instead of benefiting from it and skipping out when the bill arrives.
    Marvin, you've not accounted for the wages, benefits and retirement benefits costs surrounding the employment of millions of US government employees... employees who are self-interested in their continual push for higher salaries and benefits and do not directly answer to the public. Their compensation comes out of our taxes and there is no counterbalancing force which restrains that growth. Politicians receive the support of the government employee unions and they in turn reward these employees and unions with protections.

    In business, what determines costs/compensation is competition. In government, what determines costs/compensation is politics.
    edited August 2017
  • Reply 18 of 22
    If there is someone out there with some more expertise in EU tax law than I have (near zero), could you take a run at the question I have. My understanding is that Apple's argument (and I suspect, the U.S. government's) is that the $17 billion Apple income the EU says should be recovered by Ireland, is income that Apple says should some day be repatriated to the U.S. to pay the appropriate taxes there. Assuming the Trump tax holiday for foreign cash materializes, Apple would then bring that cash back for taxation. If the EU grabs some of that foreign cash, Apple brings back $17 billion less, obviously, hence the interest of the U.S. government.  I don't recall reading about what countries Apple holds its foreign cash in. If Apple holds all of its foreign cash in Ireland, maybe it goofed. Maybe the EU is more diligent in preventing companies (within the EU border) from holding cash reserves not immediately subject to taxes. Is this what we're talking about here or does the EU's case depend more on the failure of Ireland to apply the minimum tax rates mandated by the EU?

  • Reply 19 of 22
    gatorguygatorguy Posts: 20,267member
    gsrennie said:
    If there is someone out there with some more expertise in EU tax law than I have (near zero), could you take a run at the question I have. My understanding is that Apple's argument (and I suspect, the U.S. government's) is that the $17 billion Apple income the EU says should be recovered by Ireland, is income that Apple says should some day be repatriated to the U.S. to pay the appropriate taxes there. Assuming the Trump tax holiday for foreign cash materializes, Apple would then bring that cash back for taxation. If the EU grabs some of that foreign cash, Apple brings back $17 billion less, obviously, hence the interest of the U.S. government.  I don't recall reading about what countries Apple holds its foreign cash in. If Apple holds all of its foreign cash in Ireland, maybe it goofed. Maybe the EU is more diligent in preventing companies (within the EU border) from holding cash reserves not immediately subject to taxes. Is this what we're talking about here or does the EU's case depend more on the failure of Ireland to apply the minimum tax rates mandated by the EU?

    If Apple sells an iPhone in France the bulk of profits end up parked in Ireland avoiding French taxes.  If Apple sells an iPad in Germany the bulk of profits end up parked in Ireland avoiding German taxes. And even if Apple sells an iPhone in Australia or an iTunes track in Japan the majority of the profits ended up parked in Ireland to avoid Australian and Japanese taxes. Well technically the profits probably reside in a New York bank to be reinvested by Braeburn Capital, but under the control of an Apple-owned and Apple US managed Irish subsidiary. Countries are wising up tho, and Apple is far from the only company doing this. Just the biggest.  
    http://www.afr.com/news/politics/national/how-ireland-got-apples-9bn-profit-20140305-j7cxm
    https://www.engadget.com/2016/09/16/japanese-tax-investigation-ends-with-apple-paying-118-million/
    edited August 2017
  • Reply 20 of 22
    avon b7avon b7 Posts: 3,443member
    The more people dig, the uglier it looks to the layperson.

    If someone starts to spin this (and the other cases) as simple corporate greed to feed shareholders, Apple and the rest may feel the pinch. The hardest pinch though, will be for those who pitch directly to end users.

    If someone makes a documentary of the story to date, these companies will be forced into some serious defensive action as, for Apple,  even without a ruling from the EU on the Ireland case, things will be difficult to turn around in the public eye.

    That's because, rightly or wrongly, public opinion will judge Apple on the facts known today, and they don't look good.

    It won't be enough to claim everything was 'legal' or 'we pay the most taxes' or 'we have deep values and adhere to them', or 'that's how everyone operates' or 'the EU investigation was flawed'. The only thing people will see, is a rich multinational doing everything in its power to become even richer.

    In normal circumstances it's possible that that wouldn't be a problem. How ironic!

    The problem is that these are not normal circumstances and Apple knows it. No doubt there will be nary a squeak from the company unless someone makes a direct accusation or leaks start appearing in the press. 
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