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

Posted by Soulskill on from the don't-forget-the-gratuity dept.

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.

16 of 148 comments (clear)

  1. Good! by nospam007 · · Score: 3, Funny

    Bummer!
    And now Ireland gets punished by having to accept those 8 billion dollars of back taxes, that will teach them.

  2. $8 billion only? by NotInHere · · Score: 3, Insightful

    Great deal apple managers!

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

    1. Re:$8 billion only? by Anonymous Coward · · Score: 5, Insightful

      ^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.

    2. Re:$8 billion only? by JaredOfEuropa · · Score: 4, Insightful

      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"

      --
      If construction was anything like programming, an incorrectly fitted lock would bring down the entire building...
  3. Tim Cook disagrees by Tony+Isaac · · Score: 4, Funny

    Tim Cook says Apple pays every tax dollar it owes. Maybe the key word is dollar here. He never said Apple pays every euro it owes!

    1. Re:Tim Cook disagrees by gstoddart · · Score: 3, Interesting

      No, they just creatively define "owes" like every other corporation who feels it should be their right to not pay any taxes.

      When broke humans pay more as a percentage in tax than mega rich corporations, there's a problem.

      Given that they've been outsourcing all the fucking jobs, they don't get to pretend like they drive the economy any more.

      Corporate tax rates should increase proportional to job cuts and off-shoring ... that way they can stop fucking pretending to be the economic driving force they no longer are.

      What's that? You laid off 25% of your work force to move it overseas? Well, that will be a 25% tax increase, assholes.

      --
      Lost at C:>. Found at C.
    2. Re:Tim Cook disagrees by AmiMoJo · · Score: 4, Insightful

      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.

      --
      const int one = 65536; (Silvermoon, Texture.cs)
      SJW, n: "Someone I don't like, and by the way I'm a fuckwit" - AC
  4. *May* owe $8 billion by ilsaloving · · Score: 3, Insightful

    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.

    1. Re:*May* owe $8 billion by jbssm · · Score: 4, Informative

      We don't have "settlements" in EU like you do in the USA. When a case is presented to a legal court (consumer arbitral court is different) the matter can only get settled by the court itself, the parties cannot go around the court. The only thing they can do now it to appeal to an higher court.

    2. Re: *May* owe $8 billion by Anonymous Coward · · Score: 3, Insightful

      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.

    3. Re: *May* owe $8 billion by Aighearach · · Score: 3, Interesting

      The problem with that claim is that the accusation isn't that they were in the past out of compliance with a rule that didn't exist yet. If that was the situation, I'd understand your claims.

      But the actual situation is that they're accused of imagining loopholes instead of doing their accounting by the rules, and so they didn't pay what they were supposed to. Very, very different accusation than the one you're trying to defend against. ;)

      As an American I have to point out, it would really benefit the US if Europe cracks down on this. The whole game was to avoid US taxes in the first place. Europe has higher taxes than the US, we shouldn't be losing tax revenue due to that competition. It is only because the US companies are not paying the local European taxes that these shenanigans benefit the practitioners. US and EU both lose out, and some rich investors around the world get a bunch of misappropriated loot.

  5. Apple is cheating on their taxses... by Anonymous Coward · · Score: 5, Informative

    ...and so is Starbucks, and Amazon. and McDonalds, and Google, and Fiat-Chrysler ... et cetera ad nauseam. I hope they all get to pay billions in back taxes. Tim Cook, Eric Schmidt and the rest of those corporate demigods can regurgitate all the capitalist free market ideological diarrhea they want. As long as I'm paying something like half of what I earn in various taxes, they and their corporations can pay up too. According to Google's 2014 results statement their effective tax rate was 16%, that's a tax rate I can only dream of.

  6. Crying all the way to the bank (briefly anyway) by Maury+Markowitz · · Score: 4, Insightful

    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.

  7. Net present value by sjbe · · Score: 3, Insightful

    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.

  8. Re:Honest Company by CanadianMacFan · · Score: 3, Insightful

    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.

  9. Re: Honest Company by Namarrgon · · Score: 3, Insightful

    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.

    --
    Why would anyone engrave "Elbereth"?