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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."
... because they don't have a catchy portmanteau.
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.
Whenever a Hollywood studio wants to make a movie, they tell our government how much the taxpayers need to shell out to keep the jobs here. The last big deal cost us at least $75 million.
The threats are always that jobs will go overseas, but no thought about whether they are jobs worth keeping.
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
Yes, and that's one of the fundamental necessities for a free trade zone.
It's quite easy, Ireland can make as many tax breaks as they want for Apple as long as they are out of EU. If they want to be in EU and trade in the EU open market, then they must be subject to some basic rules.
Also, Apple has to pay these taxes, because they had profit and they failed to pay their respective taxes for more than 1 decade. They aren't going bankrupt by paying taxes over their profits like you are saying.
nobody is shocked... well except for the part where they may actually be forced to pay some of what they legitimately owe, but I am sure Ireland and Apple will appeal as the last thing Ireland wants is to upset the money trees they have imported.
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.
"They also took advantage of the government's investment into infrastructure namely, roads, court systems, etc.. They should be required to pay their fair share of taxes just like everyone else."
A finish line which has been seen to move...
Not if they are rich and powerful enough. If Hillary hasn't showed you that, then you're an imbecile.
These deals were so routine wallstreet had a name for it: The Double Irish. Why is anyone even shocked.
What's potentially shocking, or at least little-known, is that Apple is one of the first companies to use it. It wasn't well-known when Apple started doing it. It is now...
"You're right," Fisheye says. "I should have set it on 'whip' or 'chop.'"
That latter statement is untrue in the US. You must pay taxes both to the foreign government, and to the US government.
Note the verbiage, and qualifications required to get ANY KIND of exclusion, and the specificity of that exclusion, as defined in US tax code below.
https://www.irs.gov/individual...
Apple's behavior here is very much a double standard compared to the average citizen.
Yes, but if by some magic process of having my brother, who is a foreign resident, send me an invoice for "services rendered" or "brand licensing", and I paid this invoice and claimed back all of the the tax I'd otherwise need to pay on the expense, when all my brother is doing is holding the cash on my behalf in a low-tax jurisdiction, then we'd have a situation akin to what's going on with Apple, Google et. al.
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Appeal or not, the writing is on the wall, Ireland and it's theft of revenue from other countries, crippling their social services is over and Ireland will be fucked and forced to ensure all companies pay equal fucking taxes. No fucking special deal to steal other countries revenues, there should be far greater penalties applied to Ireland for this blatant scam and the economic attack on other countries.
All taxes should be paid where the revenue is generated, and not one cent of tax revenue should be allowed to be stolen by other countries. The Irish government are scum for doing this and should be made to economically suffer.
Chaos - everything, everywhere, everywhen
Those other countries should have been taxing revenue, or payrolls, or dividends. "Profit" is something that can be easily manipulated or shifted to another jurisdiction. It is the dumbest thing to try and tax.
I ran my own business for many years, and it was amazingly easy to pay zero taxes on profits. I put a pool in my backyard, and declared it an "employee recreation facility" (I held a company BBQ there just to be sure I had all my bases covered) and wrote the whole thing off against profit.
Its also about what would happen to you, the private citizen if you pulled this shit. HUGE penalties on top of what was owed and decades in jail in most countries....
Really? Private citizens would get in trouble if their government gave them tax breaks? Ireland and Apple entered into a voluntary agreement whereby Apple would keep jobs in Ireland in exchange for more favorable tax treatment. If this violates EU regulations, then it is the Irish government, not Apple, that is in the wrong, and it is the Irish government which should pay the back taxes.
If I can be modded down for being a troll, can I be modded up for being an orc, or a balrog?
I don't think the words "morally" and "taxation" belong in the same sentence. No matter how you think a society should be run, the forced confiscation of private property using a threat of violence is not moral. I am not proposing an alternative, but a lack there-of does not make extortion in any way "moral".
Below $100,000k your foreign earnings are tax-exempt.
That statement is false. I live in a country with a tax treaty with the US. As an ex-pat, I am required to file taxes with the IRS each year. Because of the treaty, taxes I pay on foreign income are deducted from taxes owed to the IRS. That does not mean my income is tax-exempt. It means I have a deduction.
(It happens to be that I pay more to my current government than I would have owed the IRS, so I don't pay any US taxes. That's still just a deduction, not an exemption.)
Problem is that making deals with a government is not illegal.
These companies, no matter how evil, acted according to how the lawmakers told them would not be illegal.
The government may be acting illegally, but who's going to sue them?
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This is faulty logic. When your accountant makes a mistake with your taxes it does not make your accountant liable for paying the difference. This is always true: when someone else who is acting on your behalf makes a mistake it never absolves you of legal responsibility. It's Apple's responsibility to check with all applicable laws and make sure things are on the up-and-up, regardless of what Ireland may have offered them.
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.
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.
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.