Apple CFO says 'fair' outcome in Irish tax investigation would be no money owed

Posted:
in General Discussion edited January 2016
On Wednesday Apple CFO Luca Maestri attacked an ongoing European Commission investigation into the company's tax deals with Ireland, claiming that a "fair" decision would find the iPhone maker owing nothing.




"This is a case between the European Commission and Ireland and frankly there is no way to estimate the impact right now, we need to see what the final decision is going to be," Maestri told the Financial Times. "My estimate is zero. I mean, if there is a fair outcome of the investigation, it should be zero."

Bloomberg Intelligence recently estimated that Apple could owe up to $8 billion or more in back taxes for 2004 through 2012. The European Commission is considering whether Ireland's tax arrangements with Apple constituted special state aid, something against European Union rules. Businesses like Fiat and Starbucks and countries like Belgium and the Netherlands have already lost rulings in similar investigations.

Apple has repeatedly insisted that it follows the law and pays everything it owes. The company is known, however, to have used loopholes in Irish tax law to pay 2.5 percent or less on billions in profits funneled through the country. Ireland's normal corporate tax rate is 12.5 percent.

Last week Apple CEO Tim Cook met with Margrethe Vestager, the head of the European Commission's antitrust efforts. Though the topic of discussion was kept secret, Cook was presumably arguing for the most lenient possible ruling.
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Comments

  • Reply 1 of 65
    crowleycrowley Posts: 5,799member
    Company CFO favors his company's interests. Shocker.

    Fortunately, the company CFO is not the designated arbiter of fairness when it comes to questions of the company's financial compliance.
    edited January 2016 cnocbuifreshmakerronncornchipjustbobfsingularitydasanman69
  • Reply 2 of 65
    cwscws Posts: 59member
    crowley said:
    Company CFO favors his company's interests. Shocker.

    Fortunately, the company CFO is not the designated arbiter of fairness when it comes to questions of the company's financial compliance.
    No one is questioning whether Apple compiled with the law. All parties agree that Apple did comply. The question is whether Ireland complied with European Union law. A ruling against Ireland would adversely affect Apple, of course.
    h2platifbpRayz2016jbdragon
  • Reply 3 of 65
    mr. hmr. h Posts: 4,700member
     to pay 2.5 percent or less on billions in revenue
    Hey AI, how many times do people have to tell you that companies pay corporation tax on profits not revenue, before you get it?
    h2pasdasdSpamSandwichrevenantjbdragon
  • Reply 4 of 65
    I think I'd dismiss this clown for such an embarrassing lack of diplomacy.
    ronnjustbobf
  • Reply 5 of 65
    I think I'd dismiss this clown for such an embarrassing lack of diplomacy.
    I think the correct phrase would be 'lack of political correctness'. 
    h2pasdasdmelodyof1974
  • Reply 6 of 65
    sflocalsflocal Posts: 4,536member
    crowley said:
    Company CFO favors his company's interests. Shocker.

    Fortunately, the company CFO is not the designated arbiter of fairness when it comes to questions of the company's financial compliance.
    Apple did nothing wrong, and the CFO is emphasizing that as well.  We all know that, and so do you.  This is not about the typical run-of-the-mill CFO that is purposely doing something shady to save tax money.  

    If the EU found that Ireland did something wrong, then it is Ireland ONLY that should foot the bill.  Apple should have zero requirements to be forced to retroactively pay back taxes that were not required at the time.  Zero.  Screw the EU.
    h2platifbpewtheckmanRayz2016jbdragon
  • Reply 7 of 65
    steviestevie Posts: 956member
    It would be a lot more fair if Ireland gave a bunch of tax refunds to Apple, given how much Apple helps Ireland's economy.  They have NO gratitude for Apple!
    h2platifbp
  • Reply 8 of 65
    cnocbuicnocbui Posts: 3,613member
    stevie said:
    It would be a lot more fair if Ireland gave a bunch of tax refunds to Apple, given how much Apple helps Ireland's economy.  They have NO gratitude for Apple!
    What an amusing idea.  It could set a trend.  The IRS could give Apple huge refunds too because they do so much for the US.  Now there's a thought, and of course to be fair, they should do the same for each and every mutinational - the great taxes back movement.

    Of course, Stevie, your personal taxes and those of your fellow taxpayers would have to be increased substantially to make up for the returned taxes, but I am sure you wouldn't mind that.
    fastasleepzoetmbjustbobfsingularitytomkarlgatorguyjbdragon
  • Reply 9 of 65
    If Ireland has been doing this in good faith since 2004 (and they have), even if the ruling goes against them, the CFO is right that the appropriate amount to charge Apple is still "zero."  The only way Apple owes money is if the ruling is retroactive, which it clearly shouldn't be, or at least couldn't be, if the EU actually wants to be "fair."  

    The CFO is 100% right.  It took the EU years to even find the time to care about this issue let alone start proceedings, and during all that time Ireland was under the impression that they were within the law.  Apple was also acting in good faith the whole time, and obeying the relevant laws the whole time.  There is certainly no fault on Apple's part. 

    Retro-active payments would be punitive.  Unless they can prove that it was all some kind of nefarious plot to evade the law (and I highly doubt the evidence exists for that), they should not be charging them retroactively.  Certainly not 11-12 years worth.   

    edited January 2016 h2platifbpcornchipewtheckmanRayz2016revenantjbdragon
  • Reply 10 of 65
    cnocbuicnocbui Posts: 3,613member
    sflocal said:
    crowley said:
    Company CFO favors his company's interests. Shocker.

    Fortunately, the company CFO is not the designated arbiter of fairness when it comes to questions of the company's financial compliance.
    Apple did nothing wrong, and the CFO is emphasizing that as well.  We all know that, and so do you.  This is not about the typical run-of-the-mill CFO that is purposely doing something shady to save tax money.  

    If the EU found that Ireland did something wrong, then it is Ireland ONLY that should foot the bill.  Apple should have zero requirements to be forced to retroactively pay back taxes that were not required at the time.  Zero.  Screw the EU.
    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.
    irelandjustbobfsingularityasdasdtomkarl
  • Reply 11 of 65
    irelandireland Posts: 17,567member
    The EU has too much power it's messing up Europe completely. Each state should return to full independence and Brussells should be broken up. We can trade and make agreements but it needs to be a case by case basis. Each country is too different and from what we see already too much power in the hands of few people in Europe is not going well for the people. Oh it's going swimmingly for the politicians, no doubt about that. Let's all be more like Iceland. I hope the UK leaves this EU and starts a trend.
    edited January 2016 h2pasdasdrevenantjbdragon
  • Reply 12 of 65
    cnocbuicnocbui Posts: 3,613member
    ireland said:
    The EU has too much power it's messing up Europe completely. Each state should return to full independence and Brussells should be broken up.
    Maybe.  Then you have the old Europe with separate currencies, border controls, import duties, regulations. A whole variety of national corporate tax rates to pay, most a lot higher than 12.5%.  There would be no single market for Apple to operate in, they would need to have subsidiaries or agents in each and every country they wanted to operate in.  I bet if you put that prospect to Apple they would have near meltdown.  The increased costs Apple would face would likely make that 8 Billion they may have to pay to Ireland seem like small change.

    The real biggie is the Euro.  It has a lot going for it but it seems like it just isn't workable in the long run from an economics perspective as the individual Euro states are just so diverse and each really needs different economic settings.  One size just doesn't fit all.
    latifbpcornchip
  • Reply 13 of 65
    h2ph2p Posts: 264member
    cnocbui said:
    sflocal said:
    Apple did nothing wrong... If the EU found that Ireland did something wrong, then it is Ireland ONLY that should foot the bill.  Apple should have zero requirements to be forced to retroactively pay back taxes.
    Ireland can't foot the bill.  The whole point of this exercise (is)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.
    If Ireland collects the 'unfair advantage' taxes for the past 11 years... shouldn't they collect interest as well? /s

    On a more serious note. You are speculating that the Ireland / Tech Co Conspiracy, once ferreted out by the EU, doesn't have any penaties levied on the conspirators?
  • Reply 14 of 65
    cnocbuicnocbui Posts: 3,613member
    h2p said:
    cnocbui said:
    Ireland can't foot the bill.  The whole point of this exercise (is)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.
    If Ireland collects the 'unfair advantage' taxes for the past 11 years... shouldn't they collect interest as well? /s

    On a more serious note. You are speculating that the Ireland / Tech Co Conspiracy, once ferreted out by the EU, doesn't have any penaties levied on the conspirators?
    I live in Ireland.  Nothing I have read suggests there would be penalties, unless Ireland were to ignore the EU  ruling, in which case it could get costly for Ireland.  There is not the slightest chance Ireland would prefer to be penalized rather than collect an additional large sum in revenue.
    justbobfasdasd
  • Reply 15 of 65
    djsherlydjsherly Posts: 1,016member

    What else is he going to say?

  • Reply 16 of 65
    cnocbui said:
    sflocal said:
    Apple did nothing wrong, and the CFO is emphasizing that as well.  We all know that, and so do you.  This is not about the typical run-of-the-mill CFO that is purposely doing something shady to save tax money.  

    If the EU found that Ireland did something wrong, then it is Ireland ONLY that should foot the bill.  Apple should have zero requirements to be forced to retroactively pay back taxes that were not required at the time.  Zero.  Screw the EU.
    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

    radarthekatmac_dogjbdragon
  • Reply 17 of 65
    Seeing Tim Cook pipe up about this again and again, I suspect that his argument was not for "the most lenient possible" ruling, but more pointedly that Apple not be singled out just because of their success. I am sure he'd be happy if the taxes were oriented in a smarter way.
  • Reply 18 of 65
    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

    Sorry, your analogy doesnt hold any water. You just have a fundamental misunderstanding of how sales tax works. When you buy a product, ultimately you are completely responsible for paying the sales tax and you are required to pay it on all purchases ( in state or out). The reason a brick and mortar store doesnt collect tax on out of state purchases is because they can't be required to do work for a state they have no relationship with. 
    in your case, if you bought it online and paid no tax, youd be wholly responsible for back taxes. Best buy would simply be unable to sell it to you without sales tax. They would have to lower the price and withold the proper tax to "match" the $800 level. 


    edited January 2016
  • Reply 19 of 65
    Sorry, Dude…

    As much as I like Apple, their tax policy sucks. It's time to cough up, pay your bill and be a good citizen. 
    dasanman69
  • Reply 20 of 65
    hmmhmm Posts: 3,405member
    mr. h said:
     to pay 2.5 percent or less on billions in revenue
    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.
    cnocbui said:
    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? 



    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.
    edited January 2016
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