The story of Apple’s Irish tax is a case of on-again, off-again – the European Commission, which brought the original claim of selective tax strategy and maneuvering, would like to see Apples back tax payment judgment be “on again.”
Reuters reports today that the EC is challenging a finding by the European General Court that suggests Apple will not have to pay the $13-$15 billion that regulators claimed it avoided by getting tax breaks from the Irish government and leveraging those tax breaks deliberately.
The EC claims that Apple took many large amounts of its global profits and put them through Irish shell companies to take advantage of special tax lenience there.
In July, the European General Court found that the European commission “did not show a selective advantage” and ruled that Apple did not have to pay.
European commissioner Margrethe Vestager disagrees. “We will carefully study the judgment and reflect on possible next steps.” said Vestager, who is known, in the stunted parlance of the recently ousted U.S. president, as simply “tax lady,” in the wake of the court’s July ruling.
It remains to be seen how this case plays out in European courts, but Apple has its critics, and the commentariat are lining up on either side of this issue.
“Apple made profits of $74 billion from 2009-2012 on worldwide sales (excluding the Americas) and paid virtually nothing in taxes to any country,” write analysts at American for Tax Fairness. “The sales were attributed to Irish subsidiaries, where the companies paid a tax rate of less than 1%. [U.S. Senate Permanent Subcommittee on Investigations, Exhibit 1a, pp. 21, 24-25] If Apple had recorded this income in the United States it would have paid as much as an additional $26 billion in taxes over four years ($74 billion x 35% tax rate).”
Tim Cook disagrees.
“It’s very complex to know how to tax a multinational… We desperately want it to be fair,” the Apple exec said earlier this month, according to AP sources, while also suggesting that the law “should not be retrofitted” to add tax burdens on Apple specifically.
Keep an eye out, because, like P/E ratios and MACDs, Apple’s eventual tax burden will probably have an impact on its stock.
