Apple May Owe $8 Billion To the EU After Tax Ruling (bloomberg.com)

Robotron23 writes: An investigation by the EU Commission may make Apple liable for up to $8 billion in back taxes. Bloomberg Intelligence estimates Apple has paid only 1.8% tax on profits between 2004 and 2012 — this ruling increases their liability to 12.5%. This decision comes hot on the heels of a tax avoidance settlement Apple reached with Italy last month for $347 million.

Comments

$8 billion only?

[NotInHere]

Great deal apple managers!

Greek pensioners and the debtor countries still have to pay a high price for the tax hole your evasion created.

Re:$8 billion only?

[Anonymous Coward]

^This

The unfortunate side-effect of tax avoidance: lower wages means lower standard of living, which leads to lower health and education. Then, to compensate for that, the government has to create programs. If the government can't fund those programs (because low wages means low tax revenue), then they shut them down, which increases the lower standard of living, health, and education.

Tax evasion really screws things up for everyone, in the long run. A few hundred dollars a year from everyone is a lot, so it's not just the super rich, big corporations.

It may be politics, too; maybe the corporations know that, if the tax dollars can't be collected, they'll end the programs. It will hurt the other party's image, and thus, their friends get elected, thereby passing laws to help their greed a bit longer.

Re:$8 billion only?

[JaredOfEuropa]

Not just that. Complicated and expensive (in terms of an absolute euro value) tax evasion schemes benefit large corporation but remain largely unavailable for small companies and middle class individuals due to complexity and cost. This puts smaller companies as a competitive disadvantage. I'm still paying 20% tax on profits for my company, and in many other EU countries that amount is higher still. Meanwhile larger companies are paying bugger all.

This is a well known fact in political circles, of course. A few years ago an entrepreneur started a fiscal consultancy firm to advise smaller companies on how to avoid paying tax on profits, and to do the legal and bureaucratic legwork for them for a reasonable fee. It didn't take long for the tax office, the finance minister, and the public prosecutor to catch on, and they went after him with a vengeance. Can't have the little people have their break after all... In that sense it is only fair that they are going after the big boys now... as long as they stay within the law doing so, and only prosecute for actual wrongdoings, not just for "unethical behaviour"

*May* owe $8 billion

[ilsaloving]

They may owe 8 billion, but what's the chances they'll actually have to pay that? If this were the US, they'd end up just making a settlement for a tiny fraction of that.
Since this is the EU, who actually make more of an effort to hold corporations accountable for their greed, the amount would be comparatively larger, but I still have trouble seeing them extracting the full amount.

Re: *May* owe $8 billion

[Anonymous Coward]

You seem to be under the illusion your member states can squabble to provide tax havens, catch American corporations in them, then point Fingers of Shame and retroactively change the rules. It is like two fishing boat captains arguing, and the crew blames the argument on the fish. I used to think Europeans were educated, but I guess that's been slipping.

Re:Apple is not "The world’s largest company

[Maury Markowitz]

"Based on its est reserves & a (conservative) valuation of $10 p barrel" :rolleyes:

They're comparing one company's total future raw material value to another's present stock value? And you think that's interesting?

The measure in question is the total *possible future value* of the company. Eventually they will run out of oil and be worth nothing. They are estimating total sales between now and then.

In comparison, Apple has nothing to run out of and can continue selling updates to their existing products forever. So by the same measure and definition, Apple's value is infinite.

Infinite >> 2.5 trillion

Crying all the way to the bank (briefly anyway)

[Maury Markowitz]

Apple has, what, $200 billion in the bank? Their quarterly income is what, $50 billion? I'm sure they're quaking in their boots.

Here's the absolute "worst" case scenario for the company: they pay the fine from change they find on the cafeteria floor, and then send out a press release with a mild complaint about it but saying they're happy as long as the money is put to good use. Ireland cuts them a side deal for the inconvenience, and Apple agrees to remain in Cork for the foreseeable future.

So basically zero change whatsoever.

Re:Tim Cook disagrees

[Arkham]

In Europe they are fine saying "Yes you complied with every tax law but we just changed our minds. Pay us $8B" and there's nothing you can do if you want to continue to do business there. It's not the US.

Net present value

[sjbe]

They're comparing one company's total future raw material value to another's present stock value? And you think that's interesting?

Sure. Present stock value is a consensus estimate of the Net Present Value of all future free cash flows of a company. In both cases you are looking at an estimate of the future prospects of the company.

The measure in question is the total *possible future value* of the company.

Correct. That is what is being measured in both cases, albeit with a different measuring stick.

Re:Honest Company

[CanadianMacFan]

All companies take advantage of the methods given to them to reduce the taxes owing. If the governments don't like them then they shouldn't have provided the methods in the first place and change the tax code.

And why would a company pay 30% of it's revenue as tax? What if their margin is only 5% or 6%? Organizations don't pay taxes on revenue but on profit.

So may I assume that you don't make use of any deductions on your income tax? After all you should feel responsible for your impact on society.

Re:Tim Cook disagrees

[AmiMoJo]

They didn't change their minds. Apple thought it had found a way to avoid a lot of tax, but the courts disagreed and said that they misinterpreted the rules.

Re: Honest Company

[Namarrgon]

Corporations already get a sweeter tax deal than "real" people ever did. People can't deduct their rent or supplies or other daily costs of being able to get work done.

Imagine if you only got taxed on your disposable income. Better still, imagine if you lived simultaneously at home and in a tax haven, and your working self paid most of your net revenue as a skill-set licence to the tax-free self who was living it up for you in the Bahamas.