Formally proposed EU tax plan could cost Apple millions
The European Commission has proposed measures to "to ensure that all companies pay fair tax in the EU," a move that will undoubtedly affect Apple.
The European Commission has announced its proposal for a reform to change the way social media, online content providers and other Internet-related companies are taxed. The proposal, which had been rumored previously, would require companies to pay taxes throughout the EU, rather than directly from where they place their European headquarters.
The proposal includes two major policy prescriptions: "Reform corporate tax rules so that profits are registered and taxed where businesses have significant interaction with users through digital channels," and the levying of "an interim tax which covers the main digital activities that currently escape tax altogether in the EU." It is meant to establish "a real link between where digital profits are made and where they are taxed."
The EC proposal does not mention any specific companies, but states that the common reform will apply to companies with "7 million euros [$8.6 million] in annual revenues in a Member State" and "more than 100,000 users in a Member State in a taxable year," as well as "over 3000 business contracts for digital services are created between the company and business users in a taxable year." These criteria would seem to apply to Apple in most, if not all, EU member states.
The interim tax would apply to companies with "total annual worldwide revenues of 750 million euros ($922 million) and EU revenues of 50 million euros ($61.5 million.)" Apple, is well over both of those numbers.
The proposal still must be submitted to the European Parliament for ratification.
Apple has long located its European headquarters in Ireland and used that country to minimize the tax it pays across the EU. the legal maneuver led to a dispute over taxation and collections with the European Commission that has been ongoing since 2016.
The European Commission has announced its proposal for a reform to change the way social media, online content providers and other Internet-related companies are taxed. The proposal, which had been rumored previously, would require companies to pay taxes throughout the EU, rather than directly from where they place their European headquarters.
The proposal includes two major policy prescriptions: "Reform corporate tax rules so that profits are registered and taxed where businesses have significant interaction with users through digital channels," and the levying of "an interim tax which covers the main digital activities that currently escape tax altogether in the EU." It is meant to establish "a real link between where digital profits are made and where they are taxed."
The EC proposal does not mention any specific companies, but states that the common reform will apply to companies with "7 million euros [$8.6 million] in annual revenues in a Member State" and "more than 100,000 users in a Member State in a taxable year," as well as "over 3000 business contracts for digital services are created between the company and business users in a taxable year." These criteria would seem to apply to Apple in most, if not all, EU member states.
The interim tax would apply to companies with "total annual worldwide revenues of 750 million euros ($922 million) and EU revenues of 50 million euros ($61.5 million.)" Apple, is well over both of those numbers.
The proposal still must be submitted to the European Parliament for ratification.
Apple has long located its European headquarters in Ireland and used that country to minimize the tax it pays across the EU. the legal maneuver led to a dispute over taxation and collections with the European Commission that has been ongoing since 2016.
Comments
Yeah, good one. Funny.
You pay tax on the money you make and then you pay tax on the things you buy.
How is taking 2 bites of my money "fair" considering that they do nothing for it?
Lets hope Italy leaves them fast.
Compare red that to Apple’s current effective revenue tax rate (~6%) and post tax reform rate (~5%).
The EU members make up the difference with a pseudo national sales tax called a Value Added Tax (VAT).
National sales taxes axes are easier to manage and insure that economic activity is taxed vs taxing profits is subject exploitation of unintended loopholes. If all countries implemented a national sales tax it would eliminate tax avoidance strategies and generate tax revenue where the revenue was generated.
The US is the only major economy that does not have a national sales tax. This causes US produced goods to be more expensive (embedded production taxes) that are then taxed at the retail level (VAT). The opposite is true of goods imported into the US (no or very low embedded taxes and no national sales tax).
Stupid is what stupid does.
Abused? If the tax system has allowances, everyone will use them. There is no abuse.
Apple, if you want to operate in a country, then you have to contribute to its growth. And as a European I'm already paying a premium for apple products (almost double in USD value).
You must live in a state where there are no Amazon owned facilities. I live in Kentucky, and pay state sales tax on items bought from Amazon.
Most States do charge sales tax on online purchases, but it's the purchaser's responsibility to pay it, and many don't. A state has little to no legal authority to require a company that has no presence in that state to collect taxes for them; they have to rely on the purchaser's good will.