EU ruling over $14 billion Apple tax bill could be overturned, suggests Irish tax advisor
The European Commission's order for Apple to pay Ireland 13 billion euros ($14 billion) in back taxes is an overreach of power, with PricewaterhouseCoopers' head of Irish tax matters Feargal O'Rourke claiming the move is tantamount to a "land grab."
In a discussion at the Irish Times corporation tax summit, Mr O'Rourke insisted the Commission had gone beyond its remit to demand repayment of taxes from Apple. Declaring the ruling for retrieving the money was "ill-judged," O'Rourke warns the regulator "Doing it by ignoring the law is not the way to do it."
O'Rourke believes the Irish government was correct in challenging the repayment ruling, insisting that no-one who was familiar with the details of the case could believe the money actually belongs to Ireland. He is also confident that the Commission's decision to demand repayment would be overturned if it was brought in front of the European Court of Justice, providing the ruling isn't politicized.
Aside from his position at PricewaterhouseCoopers, O'Rourke is also an advisor to the Irish government, assisting in the creation of incentives that help convince multinational organizations to operate in the country.
The Irish government's handling of the Apple tax case may also have a bearing on future investment, with O'Rourke advising of considerable international focus on the ruling. He suggests that, while Ireland has a stable tax environment and a low tax rate that makes the country attractive to major businesses, the Commission's interference with arrangements between Ireland and Apple may threaten this stability.
The investigation into Apple's tax affairs in Ireland ended in August last year, with the Commission claiming tax rates on Apple's European profits were illegally low, down to 0.005 percent in 2014 and 1 percent in 2003. Ireland was accused of granting "illegal tax benefits" to Apple, and had been "reverse engineered" on the fly to guarantee a minimal tax bill as time progressed.
Both Apple and Ireland are contesting the ruling, with the Irish government "fundamentally disagreeing" with the findings and resisting the back tax repayments. Apple claims the European Union "took unilateral action and changed the rules, disregarding decades of Irish tax law, U.S. Tax law, as well as global consensus on tax policy."
In December, Apple CEO Tim Cook and other high-level executives were invited to Ireland to discuss the ruling and future action. Cook declined to attend, with Apple citing the legal complexity of the case behind his refusal, a move that Irish politicians considered to be a "snub to Irish people."
In a discussion at the Irish Times corporation tax summit, Mr O'Rourke insisted the Commission had gone beyond its remit to demand repayment of taxes from Apple. Declaring the ruling for retrieving the money was "ill-judged," O'Rourke warns the regulator "Doing it by ignoring the law is not the way to do it."
O'Rourke believes the Irish government was correct in challenging the repayment ruling, insisting that no-one who was familiar with the details of the case could believe the money actually belongs to Ireland. He is also confident that the Commission's decision to demand repayment would be overturned if it was brought in front of the European Court of Justice, providing the ruling isn't politicized.
Aside from his position at PricewaterhouseCoopers, O'Rourke is also an advisor to the Irish government, assisting in the creation of incentives that help convince multinational organizations to operate in the country.
The Irish government's handling of the Apple tax case may also have a bearing on future investment, with O'Rourke advising of considerable international focus on the ruling. He suggests that, while Ireland has a stable tax environment and a low tax rate that makes the country attractive to major businesses, the Commission's interference with arrangements between Ireland and Apple may threaten this stability.
The investigation into Apple's tax affairs in Ireland ended in August last year, with the Commission claiming tax rates on Apple's European profits were illegally low, down to 0.005 percent in 2014 and 1 percent in 2003. Ireland was accused of granting "illegal tax benefits" to Apple, and had been "reverse engineered" on the fly to guarantee a minimal tax bill as time progressed.
Both Apple and Ireland are contesting the ruling, with the Irish government "fundamentally disagreeing" with the findings and resisting the back tax repayments. Apple claims the European Union "took unilateral action and changed the rules, disregarding decades of Irish tax law, U.S. Tax law, as well as global consensus on tax policy."
In December, Apple CEO Tim Cook and other high-level executives were invited to Ireland to discuss the ruling and future action. Cook declined to attend, with Apple citing the legal complexity of the case behind his refusal, a move that Irish politicians considered to be a "snub to Irish people."
Comments
Shock! An advisor who is paid (probably handsomly) to devise these deals argues in their favour? Get out of here!
The EU knew about that deal in 2014 when Tim Cook testified before the congress.
There is no agreement between Apple & Ireland.
Any multinational company could adopt a similar structure and achieve a somewhat similar tax result (its easier for a company selling goods (e.g. Apple), versus a company selling locally delivered services (like IBM or HP enterprise)
That is not acceptable, and the EU is right to want to change that situation , but they arguably don't have the legal authority to impose the outcome they are attempting to in this case (if Apple had an agreed exception to normal Irish tax law, they would have the leverage).
This is primarily a US company issue as the US is almost unique globally in that it attempts to tax company revenue regardless of where it was generated in the world. In Apple's case , goods made in country C, and sold in country B, are being assessed by country A as needing to have their profit being taxed in country A.
Apple has adopted a structure that gives it control of when it repatriates those profits to country A, and therefore when it pays tax on it.
What that means it that taxable income sits in offshore limbo, effectively paying no tax anywhere, until the US declares a tax holiday and it is repatriated.
Thus whole issue goes away if the US corporate tax rate is lowered , or the US enters into multi-lateral taxation agreements with other countries broadly (as many other countries have done), or the OECD comes up with some other option that the US signs on to (e.g. Adopting a convention bas d on concepts such as tax should be paid at point of revenue generation - i.e. where the finished goods are sold)
Tbe US government has refused to deal with this issue for 50+ years, other than congress voting about 3 times for tax holidays (which is really just kicking the can down the road).
The Trump "solution" will likely be lower US taxes, and possibly also declare a tax holiday. That's probably the worst of the 3 alternative options, but at least it's doing something.
The law hasn't changed.
Apple had a special arrangement with Ireland.
Actual facts.
Apple is on dodgy moral ground as it really should have revised their practices long ago and updated the agreement.
Effectively allowing yourself to decide how much you 'make available' for taxation is dubious from the outset. Actually paying a ridiculously tiny percentage on that amount just makes matters worse.