EU orders Apple to pay 13 billion euros for past taxes
Competition commissioner said the tech firm received selective treatment'.
Brussels The European Union on Tuesday ordered Apple to pay a record 13 billion euros in back taxes in Ireland, saying deals allowing the US tech giant to pay almost no tax were illegal.
“The European Commission has concluded that Ireland granted undue tax benefits of up to 13 billion euros to Apple. This is illegal under EU state aid rules because it allowed Apple to pay substantially less tax than other businesses. Ireland must now recover the illegal aid,” a Commission statement said.
EU competition commissioner Margrethe Vestager said Apple’s “selective treatment” in Ireland meant it paid an effective tax rate of just one percent on its European profits in 2003, which then fell to a bare 0.005 percent by 2014.
Apple and the Irish government immediately said they would appeal against the European Commission ruling, while the US Treasury said it could undermine its economic partnership with the EU.
Reacting to the order, Apple chief Tim Cook warned the ruling threatened jobs and investment in Europe. “Apple is now in the unusual position of being asked to pay taxes to a government that says they are not due,” he said.
Ireland too is an unusual situation of refusing to accept cash, which is equivalent to around five per cent of its gross domestic product as it. This ruling could affect Ireland’s policy of attracting multinational companies by offering extremely favourable tax conditions, known as sweetheart deals.
Since Ireland has almost zero corporate tax, several companies have set up their sales offices in Ireland, billing all transactions from this country. With Ireland enjoying free trade in the EU, companies paying tax in Ireland enjoy exemption across the EU.
Irish finance minister Michael Noonan said his government would appeal the ruling, fearing an ever greatest cost to his country’s economy and jobs.
But Vestager — who has launched a series of cases against US firms — said that Apple’s “so-called head office in Ireland only existed on paper. It had no employees, no premises and no real activities.”
Tensions have been growing between Washington and Brussels over a series of anti-trust investigations targeting companies such as Apple, Amazon, Starbucks and Fiat Chrysler.