Ireland’s government has agreed to collect Apple’s Irish taxes amounting to an addition 13 billion Euros from a European Commission tax ruling, but under protest. The European Union agency claims Cupertino paid so little tax on its Ireland-based operations that it “amounted to state aid,” according to Reuters.
Apple Paid Taxes, but the EU Wants More
Ireland’s Finance Minister, Paschal Donohoe, spoke with Germany’s Frankfurter Allgemeine (FAZ) newspaper and portions of the interview were published on August 16, 2017. In an interview that ranged from Donohoe’s thoughts on Brexit to the “tax evasion” claims against Apple, the new finance minister made it clear that Ireland doesn’t think it’s that country’s job to maintain a tax base for the rest of the EU.
Amazingly Low Tax Rates
According to the EU commission, Apple’s Irish taxes came out to an effective tax rate of approximately one percent in 2003. By 2014, that rate had fallen to around 0.005 percent. That’s an astoundingly low tax rate, and it’s no wonder that Cupertino has been funneling its profits on European sales through the Emerald Isle as much as it can.
For the EU’s part, it’s also not surprising that the governmental agency wants to collect more from the tech giant. So many EU nations are struggling financially that the EU leaders are surely scrambling to find every Euro they can. Tacking on additional money to Apple’s Irish taxes just isn’t the right way to do it.
Change the Law, but Not Retroactively
Yes, the EU should draft laws to require companies (all companies, not just Apple) to declare profits in the countries where the sales were made. It only makes sense, but it smacks of tyranny for the EU to penalize Apple retroactively for making smart business decisions. If there’s a loophole, close it, but don’t cry foul that others have taken advantage of that ambiguity.
The EU and individual European nations are clamping down on the practice, so it looks like Apple’s safe tax haven in Ireland won’t last much longer. Back to Ireland, Donohoe is absolutely right in denying that country’s role as tax collector for the entire EU. Apple is still appealing the finance commission’s ruling, but for the time being it appears Cupertino will have to abide by the decision.