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European Commission To Issue Apple An Irish Tax Bill of $1.1 Billion, Says Report (reuters.com)
An anonymous reader quotes a report from Reuters: The European Commission will rule against Ireland's tax dealings with Apple on Tuesday, two source familiar with the decision told Reuters, one of whom said Dublin would be told to recoup over 1 billion euros in back taxes. The European Commission accused Ireland in 2014 of dodging international tax rules by letting Apple shelter profits worth tens of billions of dollars from tax collectors in return for maintaining jobs. Apple and Ireland rejected the accusation; both have said they will appeal any adverse ruling. The source said the Commission will recommend a figure in back taxes that it expects to be collected, but it will be up to Irish authorities to calculate exactly what is owed. A bill in excess of 1 billion euros ($1.12 billion) would be far more than the 30 million euros each the European Commission previously ordered Dutch authorities to recover from U.S. coffee chain Starbucks and Luxembourg from Fiat Chrysler for their tax deals. When it opened the Apple investigation in 2014, the Commission told the Irish government that tax rulings it agreed in 1991 and 2007 with the iPhone maker amounted to state aid and might have broken EU laws. The Commission said the rulings were "reverse engineered" to ensure that Apple had a minimal Irish bill and that minutes of meetings between Apple representatives and Irish tax officials showed the company's tax treatment had been "motivated by employment considerations."
Apple has shittons of money, and this number is too lax.
... because they don't have a catchy portmanteau.
So the EU can just come down and tell it's member countries who they are and aren't allowed to give tax breaks to. This would be an interesting ruling though as ANY tax breaks would become illegal in the EU and thus there would be no viable way for companies to keep their business in the richer EU countries.
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This would be an interesting ruling though as ANY tax breaks would become illegal in the EU and thus there would be no viable way for companies to keep their business in the richer EU countries.
Umm, what? If they are paying taxes it's because they are profitable. Tax avoidance like Apple is doing is the difference between profits and more profits. You don't get taxed when you are losing money. Companies that are profitable now in "richer EU countries" would remain so, just to a lesser degree. Anyway the EU is a monetary union and there are rules relating to the flow of money within a monetary union. Just like the US being a part of the EU means that countries have given away some sovereignty in exchange for economic benefits. That's not necessarily a bad thing.
I would build huge house and live there with my money converted on PUSSY. If you wanna live with me, You must have another billion of your own.
Apple constantly tries to lower the bottom line - do you think they'll dive into their piggy bank?
http://www.theregister.co.uk/2016/08/26/apple_criticized_for_factories/
Wealthiest/filthiest gay man in the World! Is true!
Google is an Irish company too.
These deals were so routine wallstreet had a name for it: The Double Irish. Why is anyone even shocked.
Some drink at the fountain of knowledge. Others just gargle.
The corporate tax has been shrinking in America and the burden has been foisted on individuals. It is time to reverse the decades old trend.
sed -e 's/Chuck Norris/Rajnikant/g' joke > fact
You are not understanding the problem.
I will try to explain it to you.
1) apple may be headquartered in Cupertino CA, but not all of its sales are in the United states.
2) because of this, and the way international taxation works, there are "apple UK", "Apple china", "Apple Korea", etc. These are wholly owned subsidiaries of Apple USA, but the product produced and sold, is sold exclusively in the subsidiary's local market. This allows the local branch to be taxed by the locall tax authority, on the profits made by that local branch. In theory at least.
3) what really happens is that Apple Ireland, which pays essentially zero taxes, claims sales volumes for markets outside of ireland, knowing that regulators cannot easily disprove that Apple Ireland is not just selling absurd numbers of apple products, and making all that profit legitimately. This is especially true, when Apple USA tells Apple EU to buy exclusively from Apple Ireland, and charge EU customers busing from them essentially a flat shipping cost that is the exact amount they buy fro. Apple Ireland. That artificially moves sales originating in the EU to Ireland's accounting. The actuAL sale occurs inside Ireland, and thus is billable in Ireland, under Irish tax law. (NEVERMIND where the product actually ships to.)
4) Apple says this is perfectly legitimate, Ireland concurs, but EU feels otherwise. EU tells Ireland that sales from EU citizens are originating in the EU, and need to be billed and taxed accordingly.
5)Apple USA, and Apple Ireland don't want those sales to be reported as originating in the EU, because then they have to pay taxes on those sales. Stamp little feet and threaten to take their ball and go home, or to go complain to their mommies.
So Ireland is ordered to take over a 1 billion Euros in free money from one of the worst companies on the planet, not to mention one of the richest, and they said no? That's logical. I'll take the money if they don't want it. I'm 1/8 Irish.
Btw, Apple is sitting on something like 40 billion USD liquid cash and they REFUSE to use it to improve screen shatter chance or work conditions at their factories. Releasing a known defective product and lying about labor, basically having slave labor, etc is unbelievable considering the money they make. They should be brought up on something equivalent to international war crimes for the treatment of their labor force and the constant lies to cover it up.
So how do you like them apples?
Several years back (2007-9), it was standard practice at VMWare Australia for them to invoice Australian businesses out of Ireland but in US$. All moneys were paid direct to Irish banks in US$. It seemed dodgy as fuck at the time. Ireland is responsible for aiding numerous large companies to defraud other countries of tax that should rightfully (morally) have been paid by the local subsidiaries of those companies. Shame on Ireland for enabling this behaviour.
Its called a bribe.
European Commission will punish California Teachers? You don't believe it?
If a tax ruling is made, irrespective of appellation process Apple stock will take a hit. A big hit. Huge bite to capitalization.
One of the largest Apple shareholders is Vanguard Funds, and Vanguard Funds are owned by multiple 401k and pension plans in USA. Bottom line is that not only teachers, but many in the middle class will lose a boatload of money because European Commission, directed by unelected president Junker TOLD Ireland to change treatment of Ireland's laws and to extort more money.
Every time those bureaucrats try fixing and every time there will be unintended consequences, they always fuck up.
If appeals are not successful and a precedent is formed, then expect Ireland to become much less desirable manufacturing location. There will major job and investment losses.
Expect eventually Ireland to leave EU
Now brexit is a thing, the EU has to get its slush money from somewhere, so why not just gouge an industry out of existence?
Corporations aren't people, they benefit the economy and employ people as well as transferring expertise etc. Of course they shouldn't pay the same tax rates.
USA does not want to mess with the internal of the company or how it prices and deals with different divisions internally. All USA is saying is, we will tax you on worldwide income. You declare profits anyway you want, anywhere you want, pay whatever taxes you want to pay to any government you want to pay. If by US law you would have paid X$ as taxes, you pay that much in tax. If all the taxes you have paid to all other governments does not add up to X$, you pay the rest to ?USA. This is completely logical, completely made with one goal. To stop companies from racing to the bottom. Companies shop around for governments to pay the least overall tax. What USA wants to do is to make sure that they can't race to the bottom.
You declare profit anywhere you want, pay any tax due to any government. But overall you can not reduce your tax burden below a certain threshold. That is the stand taken by the US government. It is entirely logical and necessary to prevent the race to the bottom. Only people fooled by the billionaire funded media and the paid shills of them believe USA is taxing too much and the corporations are victims.
sed -e 's/Chuck Norris/Rajnikant/g' joke > fact
Or something else? Surely, if the Apple has paid the 12.5% Irish rate and correctly dealt with the VAT, it should be alright? There is no minimum corporate tax rate in the EU as far I know, but all tax rates have to apply equally to all companies, not just investing ones or the ones creating jobs.
So, low taxes attract jobs after all? And the European Commission admits it?
"Please don't give us that billion dollars we're told you owe us" said no one ever...except Ireland.
EU is just a ponzi scheme for the wealthy anyway.
See here: http://www.bbc.com/news/business-37220799
Now that is one serious fine.
13 billions not 1 billion Euros
13 Billions Euros, Ouch!
The problem here is that profits are not going to Apple IR, not goint to Apple USA. But they are going to Apple NOWHERE, so they are just avoiding to pay X€$£ taxes they should.
https://twitter.com/EU_Commission/status/770561714635104256/photo/1
http://www.forbes.com/sites/leesheppard/2013/05/28/how-does-apple-avoid-taxes/#1da651f6d6f7
#Ireland gave illegal tax benefits to #Apple worth up to €13 billion (image)
https://twitter.com/EU_Commiss...
And if their profitability falls below what investors demand as a return, then those companies move to China or close entirely, and investors put their money elsewhere. And if you don't leave investors any place to put their money with sufficient profits, they simply stop investing altogether.
In general your argument is nonsense. What do you mean "move to China or close entirely"? Do you seriously think Apple is going to close down if they make 20% net margin instead of 25% net margin? Do you seriously think they are going to become a Chinese company? Spare me. Apple already is in China in about the biggest way possible. They aren't going to move and they certainly aren't going to ignore the EU market. At most a company might relocate some production but production isn't sales and taxes occur where the sales do (or should anyway). Companies aren't going to close their doors because they make a 6% profit instead of a 10% profit. It just doesn't work that way. They might change beneficial owners but the company won't disappear. Your argument makes zero sense.
Like the subject says...where does the $1.1B number come from? I RTFA and it says $14.5B, and cnn also says the same.
Let's not forget that it is being part of EU's economic zone that made Ireland an interesting place to invest in the first place.
"The standard rate of Irish corporate tax is 12.5%. The Commissions's investigation concluded that Apple had effectively paid 1% tax on its European profits in 2003 and about 0.005% in 2014."
0.005%, are you fucking kidding me?
"You found a way to legally avoid paying about $1B of what we would normally collect from you. So we're going to fine you $1B for being so crafty!"
No, that's not going to fly. And I don't care who it is that did it. That's not a practice I want applied to me, so that's not a practice that I want to see applied to anybody else.
I work for the Department of Redundancy Department.
"Apple and Ireland rejected the accusation; both have said they will appeal any adverse ruling."
Why appeal, just pay it. Build some goodwill.
Wrong under EU tax law a company registered in the EU only has to pay tax on it's profits generated in the whole of the EU in the country where it is registered.
So if Apple Ireland sells a iPhone in the UK or Germany the profit it makes on that is taxable in Ireland.
The problem is that Ireland cut Apple a special deal that says Apple only has to pay taxes on the profit made in Ireland. That's great for Ireland because it attracts Apple to locate it's headquarters in Ireland and that provides jobs, and they still get all the tax they otherwise would have.
On the other hand the rest of the EU is royally pissed off, and have decided that it amounts to illegal state aid, hence the fine. I believe in no particular order Microsoft, Dell and Google also do the same, so expect to see requirements for large back tax bills for these firms too in the not too distant future.
This is quite separate from the sell brandnames at inflated prices tax dodge that the likes of Starbucks operate.
It's also separate from the Amazon we don't actually make profits because we reinvested it all to grow the company so no tax to pay scheme that Amazon have historically operated. This is not a tax dodge in my view but Amazon have been almost unique it operating it for such a long period of time that it has been unfairly branded as a tax dodge.
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Beyond the obvious targeting of Apple, the most profound and harmful effect of this ruling will be on investment and job creation in Europe. Using the Commission’s theory, every company in Ireland and across Europe is suddenly at risk of being subjected to taxes under laws that never existed.
The EU's conundrum is that without the tax break there's no reason for Apple, Google, Amazon, Microsoft, etc. to have any European operations other than sales fullfillment. Do they really want to kiss those tens of thousands of jobs goodbye?
Latest report I read, the number was put at 13 billion Euro's.
That's a tad more than $1.1B, but still no problem for Apple, with their €200B cash wallet, the article said.
Serves them right, for paying just 0.005% taxes on their 2014 profits.
What's less right is that the Irish government gets to collect those €13B, instead of being punished themselves for making an illegal agreement with Apple (EU countries can't just decide to tax one company at rate 0.00X% and all others, including its competitors, at rate 5*X%).
That's a moral standpoint with no useful impact.
I designed a Universal Social Security plan which reduces the tax burden on Americans by over $1 TRILLION per year. This plan completely remediates the welfare system; establishes a stable minimum income, eliminating many risks in providing goods and services to lower-income markets (currently, their income is unstable and can go away quickly, incurring massive costs for landlords especially); and slows and thus spreads the reduction of jobs by technical progress (including globalization and automation), thus reducing the short-term economic threat of sudden rapid progress (the long-term impact is always an immense increase in standard-of-living; a sudden industrial revolution creates an economic train wreck, while a longer period of growth creates immediate prosperity).
Money bound up in big bank accounts has almost no impact on the economy. Pulling it out and spending it in bulk, suddenly, causes a temporary stimulus, and largely creates inflation. This is because more money is put into play, but not more productivity; after you stop infusing huge piles of cash into the economy, there's no support for any new jobs created, except for what technical progress has occurred during the inflationary period of excess money creation (money idled and not spent is essentially removed; pouring it into the economy is essentially money creation, and differs from printing new money in that it doesn't then increase the fractional reserve basis and lead to more money creation by loaning).
By contrast, a Universal Social Security (or other effective form of Universal Basic Income) increases the amount of take-home pay relative to cost dollars. That is to say: If an employer pays $10,000 to have an employee, then that employee's work is paid for by consumers of the product the employee makes. If the employee makes 10,000 units of said product per year, then $1 of that product's per-unit price represents the employee's pay. Out of this, the employee may take home only $6,000. UBIs such as the USS change the situation such that the employee takes home, for example, $8,000, while the employer still pays only $10,000.
Obviously, such a situation means products don't face a cost increase (you still need $1 of revenue per unit to pay that guy's salary and benefits), yet consumers have more money to spend.
Look back and think about the engineering involved there. Some changes to tax policy reduce the welfare burden by over $1 trillion per year, increasing the amount of take-home pay for all working Americans, lifting low-income households out of poverty, and ensuring even non-working Americans have income sufficient for a hard-bounded minimum (but low) standard of living. Businesses don't pay any additional costs, and particularly don't pay more costs as consequence of hiring an employee; and the employee takes home more dollars per dollar paid by the employer to employ them. That changes the stable set points of the system, increasing the consumer's spending power relative to the cost of production, thus increasing buying power.
What's the engineering involved in grabbing a fistful of cash out of Apple? Hint: Apple's entire profits ($10 billion per year) would amount to $58.48/year more in every single American's paycheck; their entire cash savings is about $1,000 per working American (ONE time, not repeating). Total actual corporate profits in the United States are roughly 10% of all income--that's not small and not insignificant (it's 10%), and it's only unimportant because the economy is so much bigger than all that.
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Or, you know, the affected countries could remove the loopholes that allows this to occur. I agree that "all taxes should be paid where the revenue is generated", but that's a matter of law for the country in which the revenue is generated (including in the Americas). It's not as if this is an unknown issue, it's just that "campaign contributions" (and the fact that your politicians come from the same socio-economic class as these companies) keep the loopholes open.
what really happens is that Apple Ireland, which pays essentially zero taxes, claims sales volumes for markets outside of ireland, knowing that regulators cannot easily disprove that Apple Ireland is not just selling absurd numbers of apple products
Not quite.
Regulators can easily tell how much revenue was generated in a given country from sales in that country. But profit is the difference between revenue and cost, and it's easy for Apple to artificially inflate the costs of the various subsidiaries. It could do this by jacking up the price the subsidiaries pay for the products they sell, but the more common approach is to license IP, such as trademarks, for amounts of money chosen to ensure that the subsidiary makes no profit, or even generates a loss where that is advantageous.
That way, the profits can be realized in a locale with low taxes, like Ireland. This does mean that all of the cash flows to those low-tax locations, and that it's then difficult to move it elsewhere (e.g. to the US) without getting a big chunk eaten up by the taxes in the destination country. This is the primary reason why the tech companies that use this Ireland scheme keep huge piles of cash (like Apple's $200B), rather than paying out dividends.
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So in the UK all morning the news has been reporting it's 11 billion not 1.1 bil. Who's correct?
"motivated by employment considerations". You mean that lower taxes means more jobs? Who wudda thunk?
And rightly so. Working people are paying betweeen 38 - 52 % income tax (in the Netherlands), and big companies like Apple, Starbucks, etc are paying almost no taxes (Apple paid 0.005% in Ireland) with all the money going to shareholders and massively overpaid CEOs. Some USA CEOs get more salary than small country's budget.
It's stealing from the poor and giving to the already-rich. There are already concerns that this wealth-gap will result in riots and revolutions. This theft has to stop before it gets out of hand, your billions are no use if you have to employ a small army to protect yourself, your family, hell even your mother-in-law (ask Bernie Eclestone).
All countries in the world will benefit from local taxes being paid, specifically 3rd world countries which are being robbed of their assets via bribed officials and cannot feed or employ their people. And if all these companies pay their taxes, taxes for the working class can come down. That's the Robin Hood way, taxing the rich and giving to the poor.
EU meddling in Irish affairs.
I'm actually OK with this. Let's be clear on how and why though.
- this isn't some anti-Apple slam;
- nor is it an anti-Ireland/Irish screed;
- I'm not in a position to judge the merits of this particular decision by the EU.
No, it's the policy question that concerns me. Do you notice that every 5 years (roughly), the governments in the developed world express "great concern" about companies and wealthy individuals, using tax havens? This "concern" lasts about 6 months or so and then disappears, with no results to show. It's enough to make one think that the "concern" is all for show.
I happen to think that it's unfair that corporations and the wealthy can shield their wealth from taxation. Where's my tax haven? Why aren't the wealthy paying their share? I'm pretty sure that if I engaged in these tax shenanigans, I'd be dumped on big time by the tax man. And you know that our taxes are higher than they would be (or the services lower than they would be) if the wealthy were paying their share. It's a fundamental question of fairness IMO.
I think it's a complete distraction how people, and in particular the wealthy seeking tax shelter, complain about the tax code or rates at home. Let's be frank. They don't care what the tax rates are; they just want to pay less tax. Zero tax if possible. And in many cases they make that happen, by means fair or foul.
Corporations and wealthy individuals benefit big time from the social conditions our taxes purchase. They need to help pay for those societal benefits. I'm already doing that and it pisses me off that the wealthy do not.
I'm fully aware that large scale international tax reform is a complicated business. There are tax jurisdictions that are playing a stalling game and don't want the system to change. However this international tax game is rigged against ordinary citizens and it must stop. If Apple and Ireland are to be the index case in getting it to stop, so be it. It has to start somewhere and Apple/Ireland are as good a place as any.