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Apple Responds To Irish Tax Rulings Decision

by Ulrika Lomas, Tax-News.com, Brussels

13 September 2016


Apple CEO Tim Cook has said that the European Commission's ruling, outlawing its corporate tax arrangements in Ireland for a 10-year period, "has no basis in fact or in law" and will be appealed by the company.

Following an in-depth state aid investigation launched in June 2014, the European Commission has concluded that two tax rulings issued by Ireland to Apple have "substantially and artificially lowered the tax paid by Apple in Ireland since 1991." It ordered the recovery of illegal state aid for a ten-year period preceding the Commission's first request for information in 2013, meaning that the Irish Government must now recover from Apple as much as EUR13bn (USD14.5bn) in unpaid taxes, plus interest.

It was a ruling described by Cook in an open letter posted on Apple's website as "unprecedented," with "serious, wide-reaching implications," including to the "sovereignty of EU member states over their own tax matters."

Cook said: "As [Apple] has grown over the years, we have become the largest taxpayer in Ireland, the largest taxpayer in the United States, and the largest taxpayer in the world."

"Over the years, we received guidance from Irish tax authorities on how to comply correctly with Irish tax law – the same kind of guidance available to any company doing business there. In Ireland and in every country where we operate, Apple follows the law and we pay all the taxes we owe."

"The European Commission has launched an effort to rewrite Apple's history in Europe, ignore Ireland's tax laws, and upend the international tax system in the process. The opinion issued on August 30 alleges that Ireland gave Apple a special deal on our taxes. This claim has no basis in fact or in law. We never asked for, nor did we receive, any special deals. We nxow find ourselves in the unusual position of being ordered to retroactively pay additional taxes to a government that says we don't owe them any more than we've already paid."

"[The European Commission] is effectively proposing to replace Irish tax laws with a view of what the Commission thinks the law should have been," Cook wrote. "Ireland has said they plan to appeal the Commission's ruling and Apple will do the same. We are confident that the Commission's order will be reversed."

"At its root, the Commission's case is not about how much Apple pays in taxes. It is about which government collects the money," Cook continued. "Taxes for multinational companies are complex, yet a fundamental principle is recognized around the world: a company's profits should be taxed in the country where the value is created. Apple, Ireland, and the United States all agree on this principle."

"In Apple's case, nearly all of our research and development takes place in California, so the vast majority of our profits are taxed in the United States," Cook explained. "European companies doing business in the US are taxed according to the same principle. But the Commission is now calling to retroactively change those rules."

He said: "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."

"Apple has long supported international tax reform with the objectives of simplicity and clarity," he said. "We believe these changes should come about through the proper legislative process, in which proposals are discussed among the leaders and citizens of the affected countries. And as with any new laws, they should be applied going forward – not retroactively."

TAGS: tax | business | European Commission | Ireland | interest | law | corporation tax | transfer pricing | United States | tax reform | European Union (EU) | research and development | Europe | Tax

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