Apple CFO says 'fair' outcome in Irish tax investigation would be no money owed
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.
"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.
Comments
Fortunately, the company CFO is not the designated arbiter of fairness when it comes to questions of the company's financial compliance.
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.
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.
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.
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?
What else is he going to say?
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
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.
As much as I like Apple, their tax policy sucks. It's time to cough up, pay your bill and be a good citizen.
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.