Ireland could face fine for dragging heels on back taxes from Apple
The European Commission is set to penalize Ireland with a "non-compliance action" for failing to collect up to $17.6 billion in back taxes from Apple, owed after the Commission found the Irish government brokered unfair deals that constituted illegal state aid.
The action could be issued as soon as this week, according to a Bloomberg source. A non-compliance penalty should take the form a lawsuit, which if won by regulators would result in a fine on top of the original money due.
Ireland was initially ordered to collect back taxes by Jan. 3, but has resisted both publicly and legally.
Apple and the Irish government have been working on an appeal, the latter insisting that terms extended to Apple were available to other companies as well. Under European Union rules, governments can't offer breaks to one company without making them open to all.
Apple has maintained that it follows the law in every country it operates in, but part of the concern is that Ireland crafted rules allowing the company to pay as little as 0.005 percent in taxes by 2014. The company has been funneling billions in international revenue through Irish operations rather than paying normal taxes in markets the money was generated from.
An appeal could take up to five years. In the meantime Apple and the Irish government have in fact been arranging a collection scheme, in which the latter will hold the money in escrow with the hope of returning it after a successful ruling.
The action could be issued as soon as this week, according to a Bloomberg source. A non-compliance penalty should take the form a lawsuit, which if won by regulators would result in a fine on top of the original money due.
Ireland was initially ordered to collect back taxes by Jan. 3, but has resisted both publicly and legally.
Apple and the Irish government have been working on an appeal, the latter insisting that terms extended to Apple were available to other companies as well. Under European Union rules, governments can't offer breaks to one company without making them open to all.
Apple has maintained that it follows the law in every country it operates in, but part of the concern is that Ireland crafted rules allowing the company to pay as little as 0.005 percent in taxes by 2014. The company has been funneling billions in international revenue through Irish operations rather than paying normal taxes in markets the money was generated from.
An appeal could take up to five years. In the meantime Apple and the Irish government have in fact been arranging a collection scheme, in which the latter will hold the money in escrow with the hope of returning it after a successful ruling.
Comments
It wasn't long ago that Ireland was in dire straights. To jump out of that pithole economy (as much of the EU currently faces), they drastically cut taxes, reduced regulations, and implemented supply-side tax reforms that brought corporate taxes from 50% to a mere 12.5%. The "poor man of Europe" is now hailed as the "Celtic Tiger", and is ranked as one of the wealthiest countries in the world (GPD per capita) . Rapid growth has been driven by their adoption of pro-market, pro-growth policies, and will continue so long as they pursue their free enterprise model.
Nobody wants to be Greece.
https://en.wikipedia.org/wiki/Economy_of_the_Republic_of_Ireland
The money in question is on profits made in Europe so even if the rate goes down in the US, the money would still stay in Europe.
They would then be free to attract big business with whatever tax rates they like but they would crucially lose the free access to the Euro market. We've already seen many UK companies look at shifting operations to France/Germany etc. because we won't have the free market access to trade and skilled labour.
https://www.washingtonpost.com/news/monkey-cage/wp/2016/07/15/did-irelands-economy-really-grow-by-26-3-percent-only-on-paper-heres-the-real-story/?utm_term=.6b5983f8bb6b
Even the big companies that have 'comitted' to remaining in the UK have get out clauses in agreements if government doesn't follow through with its promises. This is in fact standard practice but when Nissan says it will remain in the UK, what it really means is that they will remain in the UK if there is no change to I business status there. That has to be thrashed out in the Brexit talks which are not going well for the UK. Ireland would see major readjustment to life outside the EU. Any fine by the EU for dragging it's heels on the Apple issue would be entirely justified. They already got an extension to the deadline.
Would Apple even repatriate overseas cash if the tax rate was lowered? They would need some serious incentives.
I think it’s important to note if this witch hunt started before the Brexit vote or after. And if that has any bearing on this.
It’s not a shame on Apple for seeing a legal opportunity regarding paying less taxes and taking it. Companies get tax rebates all the time.
While this has has nothing to do with amerI ca, I do remember reading an article on here about someone wanting the American government stepping in to quash this so that American can get first. Dibs on apples Money.
In contrast, you can spend corporate funds on whatever you deem important to your corporate interests. If that’s accessibility, renewable energy sources, employee fitness, or subsidised bagels in the cafeteria - nobody’s business.
On the other hand, what you have with Apple/Ireland is crony capitalism, not true capitalism. Legal? Yes. Moral? Not really - and it's not about "fairness" either. What this is, is a large multi-national getting in bed with government. One of the many problems with that, is it's not a true open market since the little fish can't afford to play in the big pond. All they did was find a legal way to skirt around the exorbitant taxes.
A more honorable, and still economically beneficial, approach would have been for Ireland to announce to the world, "hey, we're going to lower our corporate tax rate to 5% for all corporations of any size, open to everyone, no requirement to "wine and dine" the elite and cut backroom deals. Corporations would still flock to Ireland, and they could legitimately thumb their nose at the EU and say "suck it" because everything is above board, not only legally, but ethically as well.
What they did do might have all been legal, but it's still sleazy. Don't get me wrong, the EU taxation scheme is sleazy too. But using sleazy to combat sleazy just creates more sleaze.
What’s happening here is that the EU Commission is requiring somebody who is refusing to collect those taxes to do so, because if they don’t, it puts everybody else at a financial and business disadvantage.
Getting mad at somebody for ruining your business by violating laws you all contractually agreed upon isn’t “socialist whiners on a hissy fit”; it’s more like capitalist whiners missing out on business because a partner backed up on an agreement.