EU Commission Exposes Apple and Irish Government Sweetheart Tax Deals, Slaps Apple with $14.5 Billion Fine

EU Commission takes on Apple

There’s absolutely no discretion in the way that multiple corporations run the United States. Political actors within the government are no more than surrogates of these corporations with the goal of maximising their profit.  As these massive corporations continually break laws and bypass taxes through loopholes created by their friendly political counterparts; the american system becomes more corrupt, as power continually shifts from the government to these corporations.

Currently, the corporations have become more powerful than the nation, receiving all vital decisions in their favor, only to the detriment of the general public. This is evident in the way that corporations (not only in the U.S) are constantly declaring Multinational and moving huge parts of the organisation overseas to bypass Local Taxes. And are getting away with it. The United States doesn’t seem to concerned with what’s going on, but as AnonHQ have mentioned,

“As the saying goes; you can never hide the behavior you learn from home everywhere you go.”

This is very true. Large American companies are spoiled in their nation. And in the same way that a child will expect to get away with more if they are constantly allowed too, Large American Corporations think they can too. However, and unfortunately for Apple, that’s just not how the world works (When you’re not at home at least) and you will likely to be held fully accountable somewhere in the world.

EU Commission takes on Apple

EU Commission Exposes Multinationals

A few months ago the EU Commission launched an ongoing investigation into Apple’s Business practices within the EU and Ireland in particular. On the 30th of August, Apple Incorporated was found guilty for tax evasion by the The European Union EU Commission. They have been ordered to pay over $14.4 billion + taxes to the Republic of Ireland for receiving illegal state aid by not fulfilling its full tax obligations to the country.  

As you probably know, Apple is one the world’s largest companies. Known for designing, developing and selling consumer electronics, computer software, and online services. The tech Giant pulled in a whopping $233 billion Revenue in 2015. One could ask, why a corporation would feel the need to steal additional money with such high revenue. The general population will question the Government on why there isn’t enough funds hospitals, parks, the homeless, education funding, infrastructure etc. Your Answer is Multinational Corporations.

EU Commission takes on Multinationals

Although on a much smaller scale, American Coffee GIant, Starbucks has also been ordered by the EU Commision to pay upto $33 million to the Netherlands for a similar offence. Amazon and McDonald’s are also currently under investigation by the EU Commission for similar offences. When these rulings were announced against the American companies, the American government responded by saying the EU is unfairly targeting American companies doing business in its territories. Furthermore, A treasury spokeswoman from the U.S has warned the EU claiming that this will undermine America’s current European Investment and damage the important spirit of economic partnership that currently exists between the two regions.

“Tax rulings granted by Ireland have artificially reduced Apple’s tax burden for over two decades, in breach of the EU state aid rules. Apple now has to repay the benefits,” Vestager told journalists to debunk the American government’s view that its companies are being unfairly targeted by the EU.

Yet the EU Competition Commissioner, Margrethe Vestager has made very clear that the EU are only ensuring that the right laws are followed in its territories. Vestager further revealed how the Irish government’s arrangement with Apple allowed the tech giant to pay a ridiculous tax rate of 0.005% in 2014.

“Member States cannot give tax benefits to selected companies – this is illegal under EU state aid rules. The Commission’s investigation concluded that Ireland granted illegal tax benefits to Apple, which enabled it to pay substantially less tax than other businesses over many years. In fact, this selective treatment allowed Apple to pay an effective corporate tax rate of 1 per cent on its European profits in 2003 down to 0.005 per cent in 2014.”

According to details of the findings against Apple by the EU Commission, the way Ireland agreed to tax the profits of Irish-registered Apple subsidiaries, through which most of its non-United States profits flowed, was illegal.

EU Commission takes on Apple

As mentioned by Anon Hq, the Commission found that Apple had licensed the rights to technology, largely designed in the United States, to Irish subsidiaries. The company then hired contract manufacturers to make the devices, which they sell to Apple retail subsidiaries around Europe and Asia. Since the manufacturing cost is a small portion of device sales prices and retail subsidiaries are allocated a small operating margin, Apple Ireland is very profitable. In 2011, Apple Ireland reportedly earned $22 billion. It later paid $2 billion to its parent company in the United States for rights to Apple intellectual property. But surprisingly, the EU Commission revealed the Irish tax authority allowed Apple to pay only $53 million to the country as its corporate tax obligation.

Furthermore, EU Commissions has found that under the Tax deal Ireland made with Apple in 1991 and renewed in 2007, the majority of profits Apple had made within Ireland were allocated to ‘Head Office’, which was later discovered to not exist nor have any employees.

“This ‘head office’ had no operating capacity to handle and manage the distribution business, or any other substantive business for that matter,” the Commission said.

The Commission said this agreement had no basis in tax law, and was not available to others; representing deliberate state aid by the Irish government for Apple. This is what is known as  ‘Sweetheart tax Deals’ and are deliberately done by smaller nations to lure multinational companies and create jobs and investment.

Meanwhile, the Irish Finance Minister, Michael Noonan has said the government disagreed with the decision and would help Apple to appeal, stating the need to preserve Ireland’s attractiveness for investment.

“There is no economic basis for this decision. It’s bizarre and it’s an exercise in politics by the Competition Commission,” Noonan said.

Since being ordered, Ireland and Apple have begun an appeal case against the EU Commission and believe that all proceedings were dealt with legally in both Ireland and the EU. Although EU have a more solid case, they are going in to a legal battle that is similar to nothing before and therefore provides very little basis on how to be dealt with. What is for certain is that this could go on for sometime before we have a finalised result.

Sources: AnonHQ, Europa, Reuters, WSJ.

‘EU Commission Exposes Apple and Irish Government Sweetheart Tax Deals, Slaps Apple with $14.5 Billion Fine’ is licensed under a Creative Commons Attribution 4.0 International License. You have permission to republish this article with attribution to the author and
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