Apple holds Europe to ransom: Tech giant threatens to cut jobs in EU after Brussels orders it to pay back £11BILLION in tax over ‘illegal’ sweetheart deal with Irish government
Apple has already threatened to cut jobs in Europe after Brussels ordered it to repay £11billion ($14.5billion) – the biggest tax bill ever imposed outside the US.
The European Commission’s three-year investigation into Apple’s sweetheart deal with Ireland has found it amounted to illegal state aid.
Its damning report published today says the tech giant paid as little as 0.005 per cent tax by funnelling its non-US profits through its Irish headquarters with no staff or premises then on to its $178billion (£120bn) offshore fund.
The giant tax bill, which could reach £16billion ($21 billion) because of interest, will not be difficult for the company to pay because it made $53.4billion (£35billion) last year – the biggest profit in corporate history.
But Apple will appeal saying the Commission’s figures are ‘completely made-up’ and its CEO Tim Cook, who previously called the probe ‘political c**p’, is threatening EU job losses if they don’t back down.
The US Treasury has also warned Brussels not to pursue American companies over tax avoidance – but McDonald’s, Google and Amazon could be next.
Ireland has said it doesn’t want Apple’s money even though it is equivalent to £2,400 for each of its 4.5million residents and would cover the costs of its national health service for a year.
Big bill: Apple, which has a base in Cork, pictured, must repay £11billion ($14.5bn) in unpaid tax because the EU says its sweetheart tax deal with Ireland amounted to state aid
In the firing line: Tim Cook, Apple’s chief executive, pictured with Hillary Clinton campaign chairman John Podesta last week, has previously called the investigation ‘political c**p’ and has said his company will appeal against the ruling
Irish question: Apple ploughs all its non-US sales through Ireland, where the EU says it has been paying hyper-low tax rates. The majority of profits are then sent offshore where no tax is paid, with some going to America for research and development .
The Commission’s landmark report says that between 2003 and 2014 Apple paid a rock bottom Irish tax rate on most of its profits outside the US before sending it to a tax haven where it paid no tax at all. It has more than £120billion stashed in offshore accounts.
EU Competition Commissioner Margrethe Vestager said: ‘Member states cannot give tax benefits to selected companies-this is illegal under EU state aid rules.’
The EU intervention is going to cause a huge row between Brussels and Washington over tax powers.
The EC says Apple’s Irish arrangements allowed them to pay just 500 euros in tax on every one million euros they made.
In 2011 Apple’s profits outside America were $22billion but Ireland agreed that only 50 million euros ($55million) was considered taxable.
But Apple executives have now accused the Commission of doing the sums wrong in calculating the jaw-dropping £11billion ($14.5m) bill for unpaid tax.
It said in a statement: ‘Apple follows the law and pays all of the taxes we owe wherever we operate. We will appeal and we are confident the decision will be overturned.
‘Apple warned of the ramifications for future investment in Europe, where it employs 22,000 people.
‘The European Commission has launched an effort to rewrite Apple’s history in Europe, ignore Ireland’s tax laws and up-end the international tax system in the process.
‘It will have a profound and harmful effect on investment and job creation in Europe’
The company’s chief financial officer, Luca Maestri, claimed the tech giant paid 400 million US dollars in tax in 2014 in Ireland.
He claimed Competition Commissioner Margrethe Vestager’s assessment that Apple paid just 50 euro in tax for every one million euro it made that year was nonsense.
He said: ‘It is a completely made-up number. We really believe that the impact of this decision will be devastating for the European economy.’
It is a completely made-up number. We really believe that the impact of this decision will be devastating for the European economy
Apple’s chief financial officer Luca Maestri on the European Commission’s key tax calculations
CEO Tim Cook posted a lengthy message on apple.com, warning about devastating ramifications for the sovereignty of European countries in light of the competition chief’s hard line.
He said: In Ireland and in every country where we operate, Apple follows the law and we pay all the taxes we owe.’
Mr Cook accused Brussels of taking unprecedented action, with serious and wide-reaching complications.
He said: ‘Beyond the obvious targeting of Apple, the most profound and harmful effect of this ruling will be on investment and job creation in Europe’. From DailyMail.