Apple & Ireland 'close to deal' to protect government from losses while holding $17.7B in ...
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.
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.
Comments
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.
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."
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.
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?
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.
In business, what determines costs/compensation is competition. In government, what determines costs/compensation is politics.
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/
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.