Proposed reforms could force Apple to pay taxes all over EU, instead of just in headquarte...
This upcoming Wednesday, the European Commission is expected to reveal a tax proposal would require digital media companies -- including Apple -- to pay based on where they generate revenue, rather than where they choose to locate their European headquarters.
The change would combat the tendency of multinational tech firms to funnel income through countries that contribute relatively few sales, but nevertheless offer loopholes and generally low tax rates, the New York Times said on Monday. It would most likely target companies with annual global revenues over $925 million, and sales within the E.U. that exceed about $61 million. Taxation could shift to the countries where firms generate the most sales.
The exact terms haven't been set, the Times cautioned. Any proposal must still be approved by the European Parliament and its member states -- which is likely to mean resistance by countries like Ireland and Luxembourg, which have benefitted from multinational financial traffic. Others might dislike the idea of taxes flowing to bigger neighbors, though many are already missing out on those payments.
For years Apple has funneled billions of dollars through Irish subsidiaries, taking advantage of local rules to minimize its international tax bills. In 2016 the European Commission ordered Ireland to collect billions in back taxes, charging that it gave Apple preferential tax treatment, even going so far as to reverse-engineer rules to accommodate the iPhone maker. By E.U. law, governments must offer benefits to all companies equally.
Apple and Ireland have denied any wrongdoing and are working on appeals. The Commission has threatened to take Ireland to court over the slowness of its collection, though that could be dropped now that the country is finalizing an escrow account.
The change would combat the tendency of multinational tech firms to funnel income through countries that contribute relatively few sales, but nevertheless offer loopholes and generally low tax rates, the New York Times said on Monday. It would most likely target companies with annual global revenues over $925 million, and sales within the E.U. that exceed about $61 million. Taxation could shift to the countries where firms generate the most sales.
The exact terms haven't been set, the Times cautioned. Any proposal must still be approved by the European Parliament and its member states -- which is likely to mean resistance by countries like Ireland and Luxembourg, which have benefitted from multinational financial traffic. Others might dislike the idea of taxes flowing to bigger neighbors, though many are already missing out on those payments.
For years Apple has funneled billions of dollars through Irish subsidiaries, taking advantage of local rules to minimize its international tax bills. In 2016 the European Commission ordered Ireland to collect billions in back taxes, charging that it gave Apple preferential tax treatment, even going so far as to reverse-engineer rules to accommodate the iPhone maker. By E.U. law, governments must offer benefits to all companies equally.
Apple and Ireland have denied any wrongdoing and are working on appeals. The Commission has threatened to take Ireland to court over the slowness of its collection, though that could be dropped now that the country is finalizing an escrow account.
Comments
Your question is answered in the very first sentence of the article...
codify it in laws going forward instead of retroactive enforcement of nebulous concepts.
The current EU charter is that the EU and its member states must act and legislate consistently. As long as the same rules apply in any member state, then it aligns with the charter.
I agree on the global sales requirement. Sales outside the EU should not impact legislation inside the EU. It is not against the charter though.
99% of companies will pay no additional taxes here, just instead of it all going to 1 member state, the taxes are spread between the countries relative to the sales in each country - seems the fairest way to do things. It's more about putting a stop to the "tax haven" status Ireland and Luxembourg have been known for, for years now.
Actually if you read between the line it is specifically targeting non EU companies since EU companies are not funneling content across borders. Like in the US we have Comcast, AT&T and Verizon who provide content in the US, but they do not provide content in the EU. The EU has local providers of content so they would never be subject to this. There are no large content provided in the EU which stream all over the place.
Just read a little closer, it looks like the taxation rules will shift to the country in the EU where a company generations most of its revenues. Simple example if Apple sells more in Germany, then Apple would be taxed on all EU revenue based on Germany's tax rates not Ireland where Apple is incorporated, this could screw with Ireland's deal with Apple. Apple could decide since they have to pay the higher Germany tax why not just set up shop there and get other added benefits.
I suspect we will see more laws like this in the EU. It sound like the EU is looking to impose a sales tax kind of activity which companies will pay. The taxes are no on the profits but revenue, so it comes off the top not the bottom which most taxes are paid on profits after all deductions.
This is what happen when you promise to provide for everyone on, you let more people into your country then your economy can support, and you only require people to work 35 hours, and everyone get 6 weeks of holiday.
That compares Apple’s current tax (expressed as a percent of revenue) which about 6%. With tax reform that rate drops to about 5%.
The lower EU rate is made possible because the member countries tax consumption. It’s called VAT (Value Added Tax) which is a kind of national sales tax.
Isn't that what the E.U. is attacking Apple on, preferential tax treatment?
I'm fine with it. If that's what the people want. Giving more money to the EU, I'm sure they'll love it and have more money to waste on crap. I think the EU should just throw on another 20% on everything in taxes. People seem to like them there.
Worrying about the price of bananas is for little people.