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Apple Files 14-Point Appeal Against European Commission's $14 Billion Tax Edict (appleinsider.com)
An anonymous reader shares an AppleInsider report: Apple has filed its appeal with the European court of appeals, all declaring that the European Commission's decision to levy $14 billion in taxes on Apple on behalf of the EU is erroneous, against the rule of law, and should be stricken. The 14 points of appeal introduced by Apple on Monday challenge the European Commission (EC) on several fronts. Primarily, Apple contests that the Cork, Ireland, headquarters of Apple's European wing was properly set up, in accordance with all regulations and laws. Additionally, other apparent accounting blunders by the EC while making its decision were brought up as well. Apple points out that the taxable income attributed to the Ireland branch was misapplied, giving more weight to the Irish operation than it should, and that back taxes were being applied to worldwide profits.
Well, Apple.
The EU is applying the back taxes to worldwide profits, as Apple is choosing to transfer those profits
to the EU using IP licensing charges, and therefore those profits ARE present in the EU.
That, kids, is why they play this game. They hide worldwide profits in a tax haven, but now they want to
pretend they didnt do that.. Boo Hoo.
1. Apple pays the taxes and admits no wrongdoing, quietly sweeping this incident under the rug and hoping to never have to endure it again by greasing more than just irish hands
2. Ireland admits it illegally undertaxed apple and skirted EU tax laws, thus opening up cause for additional investigation of facebook, google, and other megacorps that conveniently headquartered in Ireland because of, er, the weather.
Good people go to bed earlier.
maybe they would not have been if Apple had not been using the Ireland operation to funnel worldwide profits there to dodge local taxes worldwide.......
look if apple had wanted to pay the taxes locally it could have, but instead it chose to funnel them there,
world was created 5 seconds before this post as it is.
Can you shill any harder? Christ, they aren't paying you!
They're a fantastically wealthy company that doesn't pay their fair share in taxes. 14 Billion is, very likely, far less than they legitimately owe. It's also an amount they can pay without noticing. If you got a letter saying you owed a buck and a quarter in taxes, you'd be annoyed, but actually paying it wouldn't change anything for you. That's what 14 Billion is to Apple -- a buck and a quarter.
Regardless, you're on Slashdot shilling for your favorite consumer electronics company. Why? What do you hope to accomplish?
Look, they know they're tax cheats. You know they're tax cheats. Everyone knows that Apple are tax cheats. Let it go, man. Let it go.
You think seven billion dollars is enough to persuade Ireland to leave the EU?
You are delusional. Even the full 14 wouldn't be a tiny part of it.
Ireland needs EU membership more than almost any other EU state. And that's before you take into account its tax shelter gains.
Ireland was part of an agreement that set minimum corporate taxes. They ignored the agreement, therefore Apple owes money.
Of course Apple transfers profits. They do this by one company division charging another division a fictional/unrealistic licensing fee, causing the worldwide retail branches to see higher costs and be less profitable, whilst the Irish licensing branch becomes more profitable.
The fact that the Irish branch barely employs any people and is largely just a convenient IP holder makes this even more blatant.
See https://en.wikipedia.org/wiki/...
They are trying to enforce the agreement that companies have to be taxed equally. This agreement has a very good reason for existing - so countries can't give special tax breaks to companies based in that country while heavily taxing all foreign competition.
Ireland is part of this agreement. So they aren't allowed to give Apple a special deal.
Apple was abiding with a special deal Ireland made with them but the deal was illegal according to EU regulations. What the EU did is basically tell Ireland "you cannot treat Apple favourably compared to other companies since it would be unfair to the companies not getting the special deal, so your special deal is null and void and your own regular taxation applies instead".
Unfortunately, this story is about much more than just Apple and/or Ireland.
The tax practices employed by Apple (and others, including Microsoft, Amazon, Facebook, Starbucks and others - and I don't mean to pick on US companies, but by and large they do appear to be the most flagrant abusers of this system) use tax "vehicles" such as the licensing of intellectual property rights to move exceptionally large amounts of cash from one country [tax jurisdiction] to another, thereby massively reducing their tax burden.
However, for the "donor" country - i.e. the one that is not collecting any tax revenues from the sales achieved by that company, the problem gets much, much worse. The literally billions in taxes not being paid to these countries still has to be collected from somewhere. And that is exactly what happens - the individual, personal tax payers of those nations end up footing the bill.
Next, it gets worse still...
The governments of countries with "higher" Corporation Tax regimes then get visits from senior management from these large multinationals, explaining that of course they would like to "do more business" [and thus pay more tax] in those nations. Except, of course, the tax levels are just, simply, too painfully high. So, regrettably, the company will move its regional offices next door, to a lower tax regime.
The net result of all this is that countries the world over appear to be in a "race to the bottom" because they are told that this is the only way to attract inward investment. This is simply not true.
If we take a country such as the UK, for example [currently embarking on an acrimonious but necessary divorce from the EU... and look at the tax-paying population and the amount of tax involved... the literally billions in revenue that is transferred off-shore to avoid the payment of UK Corporation tax would, if actually paid in the UK, cut taxes for UK citizens by a staggering amount. The basic rate of personal Income Tax could easily fall from the current 23% to 15% [still more than Corporation Tax in the UK - and never mind the fact that companies get to deduct their expenses first...]
A population granted this extra income would:-
1. Spend more - thus helping to keep the economy moving
2. Save more - thus helping to reduce the burden on the state for things like pensions
3. Invest more - thus helping UK business to grow and prosper
There are countless studies showing that a better standard of living leads to a healthier population. In fact, there are no good reasons for allowing companies to "dodge" paying taxes in the way that is currently allowed [unless, of course, you happen to be a senior manager or shareholder in that company, in which case you stand to reap obscene profits].
The fact that we're even having this discussion should tell you just how corrupt and perverted the system of international taxation has become. The sad part is, that 99% of us are losers in this game...
It's not just citizens, but also anyone with a permanent residence permit (Green Card).
The US is one of two countries that does that, the other one is some third world country that most people will struggle to name or find on a map.
And why? I believe it has to do with the US civil war. It's long over, of course, but the laws stuck around.
Since that's what the EU has ruled it's not really a mistake unless an appeal rules otherwise. Other businesses in Cork were paying the taxes just not Apple.
Not what happened. It was a simple as Apple bullying a local council into letting them avoid taxes or they would move and take all those jobs with them. I've got no idea why you are pretending otherwise, I thought Apple fanboys hated the Pepsi guy who replaced Steve Jobs. The tax evasion was implemented back then.
They transfer Asia, Oceanic etc profits to the EU.
As an example, despite a lot of sales Apple Australia has made a loss for many years because they buy everything from Apple Ireland and sell below cost. It is called transfer pricing.
To my understanding this is not about US profits. The 14 billion comes from Apple applying what's known as the double Irish tax loophole that used to exist in Irish law, allowing them to effectively dodge paying taxes to either the EU or the US. Quoting the wiki:
The loophole was closed last year:
So Apple (and other large tech companies) have been using both the double irish as well as its other variant the Dutch Sandwhich which functions similarly, to dodge taxes on both sides of the Atlantic, while claiming to European tax-authorities that they're paying tax to the US, and to the US that they're being taxed in Europe, while in reality the majority of the income is not taxed in either. The EC is arguing that the use of these loopholes goes against EU regulations and that they now want these companies to pay what they actually should have been paying all the time. This is going to drag in courts for a long time, and Apple is going to claim that since it functioned within Irish law (at the time) it shouldn't have to pay anything. The EC on the other hand, is going to build their case on the grounds that the Irish law itself that allowed for this arrangement was in breach of EU law and cannot be followed and back-taxes are owned.
This whole case is one of several ongoing ones regarding the use of tax-havens to dodge corporate taxes, which has been (and still is in some senses) relatively easy to do for large multinationals. The EU is currently trying to crack down on it, whereas the US, especially now under Trump's heavily wall street backed cabinet, is g
"It is the business of the future to be dangerous" -Alfred North Whitehead
If demanding taxes to be paid is "stealing", then what do you call it when somebody uses resources they aren't paying for? You know, if a person feels entitled to exploit the generosity of others and gives nothing back, we call him a parasite and suspect him of being a psychopath, so what kind of person is Apple? And if Ireland gives unreasonable tax benefits to certain, big corporations, does that not skew the market that is the very foundation of the EU (and which, incidentally, is the reason why Ireland wants to be a member)?
I have a good deal of respect for people who honestly believe in freedom and free market capitalism (even if I don't agree), but what you are talking about is just nonsense. The free market only stays free in any meaningful sense, if everybody genuinely agrees to follow the same rules, and that includes taxation and competition.
The fact that the Irish branch barely employs any people and is largely just a convenient IP holder makes this even more blatant.
Apple Ireland employs around 4,000 people in Cork, in areas from sales to finance to customer support. It's a major employer in the city and has been for over 30 years, where it used to provide a lot of manufacturing jobs (few of these are left now). The only country in the EU with more Apple employees is the UK, where the number of Apple retail stores (37) explains the difference.
So it's hardly a brass-plate operation.
Rational thought is the only true freedom
The double Irish tax maneuver is worthless on its own without the Dutch sandwich.
The double Irish involves having an Irish registered company legally headquartered elsewhere than the EU (like the Caymans) as well as an Irish registered company headquartered in the EU. This used to be allowed, but it is not allowed any more (and existing structures of this sort have to wind down over the next few years).
There are two components to this. First, the Irish tax is based on where the income is made and only tax Irish income, so do not tax based on income from sales outside the country. This seems reasonable on it's own, but it interacts with other countries tax rules which tax based on where the income is booked. As a result, a company can book profits in Ireland, and fall into the gap between these positions.
The second component is profit moving - the resultant profits can be moved between the resident company and the non-resident company at no (or extremely low) taxes, but moving the money out of the EU to the external HQ would be taxed heavily from Ireland. However, this is not taxed heavily in Holland (due to historical attachments to the Dutch Antilles). So the organization move the money to Holland (inter-EU transfer, low tax), and from that subsidiary to the tax haven (Dutch law, low tax) and then have it in a tax haven for a very low cost. Where they sit on it because the US tax is punishing.
The solution is not higher taxes, it's closing these gaps that companies exploit.
Rational thought is the only true freedom
Actually, that's not correct. They're enforcing an agreement that all companies inside a jurisdiction have to be treated the same. If Ireland wanted 0% corporate tax, and applied that to everyone that would be inside the rules. What the Commission decided is that the deal Apple got was an unfair subsidy because no-one else used it. Ireland and Apple say that it was available to everyone, so it wasn't a subsidy and it wasn't unfair.
Rational thought is the only true freedom
How much an Apple is like a Big Mac.
What, good looking in pictures and tasty in theory but actually a disappointing mess of crap?
Wanna buy a shirt?
https://www.redbubble.com/people/stealthfinger/shop?asc=u
The EU doesn't want those taxes, they want Ireland to collect them according to their tax schedule in order to create a level playing field in the EU. What local business wouldn't love a 0.005% effective corporate tax rate? Most pay 20-25%
If construction was anything like programming, an incorrectly fitted lock would bring down the entire building...
Doesn't this just end up boiling down to higher effective taxes?
For companies the size and structure of Apple, yes it does, although then they'd move on to more aggressive transfer pricing or something else.
My general sense is that the larger problem isn't paying or not paying taxes, its the cash hoarding these semi-monopoly companies do. A lot of the money just ends up in short-term treasuries or other semi-liquid investment vehicles and doesn't circulate in the economy. In some ways, taxes can be seen as the economic investment of last resort -- a way to bring hoarded capital into the market.
Yes, I tend to agree with this, although the not-paying of taxes is a contributory factor in the cash hoarding .The cash hoards get so large in part because of the tax avoidance. A further factor is the US corporation tax rules, and rates, which are very high.
A better policy would seem to be incentives to spend and not hoard capital so it gets put into motion in the economy.
Easier said than done! Although companies have figured out some ways around this, Apple again being one of the innovators. If they need liquidity in the States that they don't have (because their dragon's hoard is in Barbados) they simply borrow. The cash hoard is collateral, and the interest rates are very, very low because Apple are not a default risk with 200 billion dollars lying about behind the couch. So they have liquidity where they need it without giving up 35% of their money. Apple don't care about their 200 billion being offshore and (technically) inaccessible because there is nothing they want or need to do with it that they can't do out of normal revenue (which they'll probably get a tax break for) or cheap loans.
On a more general point, a further problem is that at the moment, business capital is not in short supply due to the very low interest rates so there's capital looking for opportunities. Historically we can say this is a dangerous situation as this situation can lead to a tendency to inflate stocks which can lead to a bubble/burst situation. Taxes could soak up some of this excess capital and allow it to be spent on the collective in the form of public infrastructure but at the moment it is difficult to tax and business largely have no reason to invest in public infrastructure. So the money is static (as in it is not circulating) and at a time when the US is richer than at any time in its history it has infrastructure problems and those who could be employed in fixing it are idle.
Rational thought is the only true freedom
How is this relevant to either the great-grandparent post (claiming that Apple Ireland was barely a fig leaf because there were so few workers) and my original post (which pointed out that 4,000 people isn't a brass-plate operation)?
Ireland, as it turns out, is important to Apple or they wouldn't base so many people there for so long. Similarly, Google, IBM, Facebook, Intel, Cisco, HP, Eriksson, Analog, Dell/EMV, Microsoft - all the biggest European and American technology firms have substantial operations in Ireland in Dublin, Cork, Limerick, Galway, Leixlip and Athlone. Up until a few years ago they absolutely could have been two guys and a dog, and it wasn't on anyone's hitlist. But all of them employ thousands of people in development, manufacturing, sales, customer support and finance. Hell, Dell moved it's entire 5,000 person EU manufacturing hub out of Ireland and still employs over a thousand people before they bought EMC (which added thousands more).
So it's more than taxes, although that's part of an overall attractive package that includes close cultural ties with America, native English speaking with strong second language skills, and good education.
Rational thought is the only true freedom
Then maybe blame the company for moving their taxable profit to a tax-haven EU Country? Apple made a dick move and got caught, we need to modify our laws so that dick moves like those are completely unrewarding. The border tax or some equivalent VAT would work.
Only I can judge you.