Tim Cook is spot on. This is utter political crap pulled out of nowhere, and arbitrarily. Apple will soon bring its money back to the US, even if it has to pay the incremental taxes on it. Otherwise, it'll just set off a round robin of money grab from governments around the world. Up next, Google, Facebook, Microsoft, Cisco, Amazon.... A trade war is coming, folks.
And, as usual, all the welfare queens (and kings) of the EU have shown up on this Fourm bright and early, thanks to the time difference.
I listened to Tim Cook trying to defend Apple's pitifully low tax rate on the BBC news this morning and it just sounded bad. Very bad PR. Attacking the EU is very unwise. All the people whose businesses pay tax at 20% are looking at this and saying why should Apple pay tax at less than 1%. As a life-long Apple evangelist, even I find this Apple hard to swallow.
Well you’d better practice swallowing then because this ruling will not stand. Cook is right. Apple has been targeted. All over the world any government with even the slightest interest in improving their economies offers tax incentives for businesses to locate there. In my home county almost every business, large or small, asks for tax breaks, tax deferments, tax abatements, TIF (tax increment financing). It’s the price you pay for landing jobs in your community. And by the way, the EU ruling demands Ireland collect these back taxes from Apple. What if Ireland refuses to do so? What will the EU do then?
If Apple ever has to pay a penny towards this embezzlement scheme, then Apple should promptly raise the prices of virtually all Apple products sold in the EU zone by an appropriate amount, no matter how high the percentage is increased, to compensate for any loss.
Considering most of Apple's EU sales are in the UK, which will be leaving soon, I don't think anyone would even notice a further 100% mark up on Apple products in the EU. People that especially wanted them would buy them from outside the EU and ironically the closest non-EU market would be the UK. Besides, Apple doesn't set prices like that, Amazon would buy their products centrally and charge what they like in each country.
Where did you get the figures that most EU sales of Apple are in the UK. In terms of population the UK represents less than 15% of the EU, it is hard to believe that the UK would generate most of the EU sales for Apple, even if the iPhone marketshare in the UK is the highest in Europe. Buying a phone in a foreign country is not without hurdles (warranty, languages issues, travel expenses, exchange rate, ...)
BTW: the EU did not ask Apple to pay taxes. The EU told Ireland (not Apple) to recover taxes they failed to get paid from Apple. It is quite a difference.
This is exactly right. Apple is caught in the middle of a stupid intra-EU spat. They will never see the counterfactual of the trillions that don't get invested there in the future by US corporations (who are still, by far, the largest investors there).
BTW: the EU did not ask Apple to pay taxes. The EU told Ireland (not Apple) to recover taxes they failed to get paid from Apple. It is quite a difference.
This is exactly right. Apple is caught in the middle of a stupid intra-EU spat. They will never see the counterfactual of the trillions that don't get invested there in the future by US corporations (who are still, by far, the largest investors there).
Where do you think the $Trillions from US corporations will go instead and why? Honest question.
The EU has a VAT - value added tax system, where the taxes are allocated based on where the value to the product was added.
They do not have a sales tax based system.
No value is added in the EU, they are just a consumer. So the taxes should rightfully be applied upstream - either to the US, where the product was designed and developed, or in China where the product was built. (or Ireland where the R&D is performed *cough*).
Outstanding point. Most anti-Apple, pro-EU types here would have no clue as to what you're talking about, I am guessing. If they did, they would understand that the Commission's claim that taxes are owed somehow based on the sales in a country is a complete lie.
BTW: the EU did not ask Apple to pay taxes. The EU told Ireland (not Apple) to recover taxes they failed to get paid from Apple. It is quite a difference.
This is exactly right. Apple is caught in the middle of a stupid intra-EU spat. They will never see the counterfactual of the trillions that don't get invested there in the future by US corporations (who are still, by far, the largest investors there).
Where do you think the $Trillions from US corporations will go instead and why? Honest question.
I am not following your question. Do you mean the trillions in existing cash, i.e., retained earnings abroad? Or future profits?
BTW: the EU did not ask Apple to pay taxes. The EU told Ireland (not Apple) to recover taxes they failed to get paid from Apple. It is quite a difference.
This is exactly right. Apple is caught in the middle of a stupid intra-EU spat. They will never see the counterfactual of the trillions that don't get invested there in the future by US corporations (who are still, by far, the largest investors there).
The classic bluster of the rich: "we'll leave the superior markets with the best education and infrastructure if they don't also cut us additional breaks on tax and regulation".
They hardly ever leave, and the ones that do are the ones you don't want anyway.
This is exactly right. Apple is caught in the middle of a stupid intra-EU spat. They will never see the counterfactual of the trillions that don't get invested there in the future by US corporations (who are still, by far, the largest investors there).
Where do you think the $Trillions from US corporations will go instead and why? Honest question.
I am not following your question. Do you mean the trillions in existing cash, i.e., retained earnings abroad? Or future profits?
BTW: the EU did not ask Apple to pay taxes. The EU told Ireland (not Apple) to recover taxes they failed to get paid from Apple. It is quite a difference.
This is exactly right. Apple is caught in the middle of a stupid intra-EU spat. They will never see the counterfactual of the trillions that don't get invested there in the future by US corporations (who are still, by far, the largest investors there).
The classic bluster of the rich: "we'll leave the superior markets with the best education and infrastructure if they don't also cut us additional breaks on tax and regulation".
They hardly ever leave, and the ones that do are the ones you don't want anyway.
You really should learn to read a bit better, and not be blinded by your pro-EU tax passions. Who said anything about "leaving"? C'mon, please stick to things I actually said.
All arguments presuppose taxation as such is moral, of course.
Already 2 dislikes. In 20 years, Bernie Sanders will have be seen as a conservative here. The only reason we won't be Venezeula in 50 years is that we started from a higher economic level. All in for the new MacBook Pro.
This is exactly right. Apple is caught in the middle of a stupid intra-EU spat. They will never see the counterfactual of the trillions that don't get invested there in the future by US corporations (who are still, by far, the largest investors there).
Where do you think the $Trillions from US corporations will go instead and why? Honest question.
I am not following your question. Do you mean the trillions in existing cash, i.e., retained earnings abroad? Or future profits?
Whatever it was you were talking about.
I was taking about the retained earnings abroad, and the fact that it will be brought back.
It'll simply be be returned to shareholders instead of being invested in real assets.
There's a lot of Apple haters who came out of the woodwork this time (early commenters). What I don't understand is why all the news agencies and commenters take the EU's calculations at face value instead of doing some basic math.
"The benefit, according to the commission, was effective tax rates of 0.005 percent in 2014 and 1 percent in 2003. As the figures are not in alignment with Ireland's standard tax rate of 12.5 percent, the country is being accused of providing Apple illegal state aid."
"They just picked a number from I don't know where," Cook said. "In the year that the Commission says we paid that tax figure, we actually paid $400m. We believe that makes us the highest taxpayer in Ireland that year."
If you calculate using either supposed effective tax rate and Apple's tax payment (something Cook knows) this would mean Apple had sales of $40B (1% tax in 2003) or $8T ($400M/0.005% in 2014). Correct me if my math is wrong but I don't remember Apple selling that much in the EU in either year.
As for all the complainers about the amount of corporate tax they pay in the US and around the world, if you're paying the set or maximum rate you need to hire an accountant because you're not taking all your legal business expenses and deductions. Those aren't, for the most part, skirting the law they're simply complying with the law, which is what Apple did in Ireland.
I'm so ashamed of being European right now and thank goodness I don't live there anymore. It's one thing of slapping the hands of Ireland who offered this deal to Apple and to discontinue this practice which I'm all for. But it's another thing with demanding money for something that has happened in the past that was in full accordance with the law.
Worse, the European (well I only read German so I shouldn't generalise but I see what some of you guys write here) media spin it to greedy cheat Apple and this for sure hurts Apple in the long run.
One should not forget that this kind of financial support is paid to anyone who is big enough to be attractive and a company cannot just pay more taxes out of goodwill because they feel like. A company has to be profitable and has responsibility to it and its employees (first and foremost).
It makes me sick that the EU just goes out, in dire need of money, and decrees what was lawful for 36 years to be unlawful.
This is exactly right. Apple is caught in the middle of a stupid intra-EU spat. They will never see the counterfactual of the trillions that don't get invested there in the future by US corporations (who are still, by far, the largest investors there).
Where do you think the $Trillions from US corporations will go instead and why? Honest question.
I am not following your question. Do you mean the trillions in existing cash, i.e., retained earnings abroad? Or future profits?
Whatever it was you were talking about.
Um, I was taking about the retained earnings abroad, and the fact that it will be brought back.
It'll simply be be returned to shareholders instead of being invested in real assets.
Oh. When you said "They will never see the counterfactual of the trillions that don't get invested there in the future by US corporations" it sounded as tho you were talking about something other than retained earnings.
So those $Trillions in retained earnings are invested in the EU now? I'm not reading they are.
As an example didn't reports awhile back say Apple was mostly buying US Treasury's and other very safe but low-return (1%?) securities with those "overseas" funds, keeping their money safely within the US borders? Remember the Braeburn story a few months ago? If accurate those foreign funds are invested in the US more so than the EU aren't they? I suspect Google's cash, MS cash, and others are handled similarly, placed in low-risk investments like US Treasury certificates IMHO. Investing in Europe wasn't their goal.
The US government and American companies should target the EU back, hit them hard enough to get them dissolved. To hell with any consequences to be fixed later. The EU is an ill conceived organization managed by idiots that should not exist. The world would be better without them.
It may have escaped you attention but economically the EU is pretty much the same size as the US. Any juvenile 'tit-for-tat' sanctions would hurt EVERYONE. But thankfully, you are not in charge of the economy.
It is sad to see Tim Cook taking this line. Most of the people on this forum will stay with Apple to the bitter end but vast swathes of the unconverted may just look at this situation and decide to go for Samsung for their next phone.
Let's be honest, Apple are the easy target in this story but many others will follow. International corporations of all nationalities take the p*ss when it comes to paying their taxes and unless you happen to be a major shareholder in one of them I don't really understand why people here are prepared to defend them. Those of us that run small businesses don't have the resources to exploit tax loopholes. We end up paying more because they pay less.
This is exactly right. Apple is caught in the middle of a stupid intra-EU spat. They will never see the counterfactual of the trillions that don't get invested there in the future by US corporations (who are still, by far, the largest investors there).
Where do you think the $Trillions from US corporations will go instead and why? Honest question.
I am not following your question. Do you mean the trillions in existing cash, i.e., retained earnings abroad? Or future profits?
Whatever it was you were talking about.
Um, I was taking about the retained earnings abroad, and the fact that it will be brought back.
It'll simply be be returned to shareholders instead of being invested in real assets.
Oh. When you said "They will never see the counterfactual of the trillions that don't get invested there in the future by US corporations" it sounded as tho you were talking about something other than retained earnings.
So those $Trillions in retained earnings are invested in the EU now? As an example didn't reports awhile back say Apple was mostly buying US Treasury's and other very safe but low-return (1%?) securities with those "overseas" funds, keeping their money safely within the US borders? Remember the Braeburn story a few months ago? If accurate those foreign funds are invested in the US more so than the EU aren't they? I suspect Google's cash, MS cash, and others are handled similarly, placed in low-risk investments like US Treasury certificates IMHO.
And, you are not seriously implying that Apple hasn't invested and grown abroad massively, are you? In the EU, Asia, Middle East (in countries like Israel)? The fact that it is invested in safe assets awaiting future investment opportunities has nothing to do with it. The key point is, it hasn't been returned to shareholders.
I don't think that's a good argument for Tim Cook to make, that this is a grab for US taxes, because Apple doesn't PAY US Taxes on those profits and keeps it offshore to avoid paying US Taxes.
It's reasonable to argue the ex post facto aspect of this ruling, question the authority - but I think going forward the really sweet deal for taxes is toast. Negotiate a shorter timespan for the back taxes (which means much less money owed) and declare victory.
Apple does not avoid paying taxes, any more than anyone who has a 401(K) account avoids paying taxes. It's called deferring taxes, and there's a huge difference between that and avoiding taxes. Let's just get that straight.
It is sad to see Tim Cook taking this line. Most of the people on this forum will stay with Apple to the bitter end but vast swathes of the unconverted may just look at this situation and decide to go for Samsung for their next phone.
LOL. Have you looked up how much Samsung pays in taxes in the EU? Can you produce any figures to show that it is at a higher rate than Apple does?
Comments
And, as usual, all the welfare queens (and kings) of the EU have shown up on this Fourm bright and early, thanks to the time difference.
(And, et tu!?)
They hardly ever leave, and the ones that do are the ones you don't want anyway.
It'll simply be be returned to shareholders instead of being invested in real assets.
"The benefit, according to the commission, was effective tax rates of 0.005 percent in 2014 and 1 percent in 2003. As the figures are not in alignment with Ireland's standard tax rate of 12.5 percent, the country is being accused of providing Apple illegal state aid."
"They just picked a number from I don't know where," Cook said. "In the year that the Commission says we paid that tax figure, we actually paid $400m. We believe that makes us the highest taxpayer in Ireland that year."
If you calculate using either supposed effective tax rate and Apple's tax payment (something Cook knows) this would mean Apple had sales of $40B (1% tax in 2003) or $8T ($400M/0.005% in 2014). Correct me if my math is wrong but I don't remember Apple selling that much in the EU in either year.
As for all the complainers about the amount of corporate tax they pay in the US and around the world, if you're paying the set or maximum rate you need to hire an accountant because you're not taking all your legal business expenses and deductions. Those aren't, for the most part, skirting the law they're simply complying with the law, which is what Apple did in Ireland.
Worse, the European (well I only read German so I shouldn't generalise but I see what some of you guys write here) media spin it to greedy cheat Apple and this for sure hurts Apple in the long run.
One should not forget that this kind of financial support is paid to anyone who is big enough to be attractive and a company cannot just pay more taxes out of goodwill because they feel like. A company has to be profitable and has responsibility to it and its employees (first and foremost).
It makes me sick that the EU just goes out, in dire need of money, and decrees what was lawful for 36 years to be unlawful.
Shame on you.
So those $Trillions in retained earnings are invested in the EU now? I'm not reading they are.
As an example didn't reports awhile back say Apple was mostly buying US Treasury's and other very safe but low-return (1%?) securities with those "overseas" funds, keeping their money safely within the US borders? Remember the Braeburn story a few months ago? If accurate those foreign funds are invested in the US more so than the EU aren't they? I suspect Google's cash, MS cash, and others are handled similarly, placed in low-risk investments like US Treasury certificates IMHO. Investing in Europe wasn't their goal.
It is sad to see Tim Cook taking this line. Most of the people on this forum will stay with Apple to the bitter end but vast swathes of the unconverted may just look at this situation and decide to go for Samsung for their next phone.
Let's be honest, Apple are the easy target in this story but many others will follow. International corporations of all nationalities take the p*ss when it comes to paying their taxes and unless you happen to be a major shareholder in one of them I don't really understand why people here are prepared to defend them. Those of us that run small businesses don't have the resources to exploit tax loopholes. We end up paying more because they pay less.
And, you are not seriously implying that Apple hasn't invested and grown abroad massively, are you? In the EU, Asia, Middle East (in countries like Israel)? The fact that it is invested in safe assets awaiting future investment opportunities has nothing to do with it. The key point is, it hasn't been returned to shareholders.