30 August 2016

They Can Find it In Their Couch

Apple was just assessed a €13 billion ($14.4 B) fine tax delinquency for using Ireland as a tax haven. Essentially the European Commission ruled that Apple received tax breaks from Ireland that amounted to an illegal subsidy to the computer and phone maker:
Apple has warned that future investment by multinationals in Europe could be hit after it was ordered to pay a record-breaking €13bn (£11bn) in back taxes to Ireland.

The world’s largest company was presented with the huge bill after the European commission ruled that a sweetheart tax deal between Apple and the Irish tax authorities amounted to illegal state aid.

The commission said the deal allowed Apple to pay a maximum tax rate of just 1%. In 2014, the tech firm paid tax at just 0.005%. The usual rate of corporation tax in Ireland is 12.5%.

“Member states cannot give tax benefits to selected companies – this is illegal under EU state aid rules,” said the European competition commissioner, Margrethe Vestager, whose investigation of Apple’s complex tax dealings has taken three years.
Here is where it gets weird: Ireland, which stands to benefit to the tune of €2800 for every man, woman, and child in the country is fighting this, as is the US Treasury department, which one would expect to fight this sort of illegal tax scheme:
Vestager’s ruling prompted an angry response from Apple and from Ireland and is likely to spark a political row between the US and the EU. The US Treasury said the ruling threatened to damage “the important spirit of economic partnership between the US and the EU”.


The commission said Ireland’s tax arrangements with Apple between 1991 and 2015 had allowed the US company to attribute sales to a “head office” that only existed on paper and could not have generated such profits.


The Irish government, however, wants the ruling reversed because it wants to preserve its status as a low-tax base for overseas companies.

Ireland’s finance minister, Michael Noonan, said Dublin would appeal against the ruling. He said: “The decision leaves me with no choice but to seek cabinet approval to appeal. This is necessary to defend the integrity of our tax system, to provide tax certainty to business and to challenge the encroachment of EU state aid rules into the sovereign member state competence of taxation.”
This was money laundering, pure and simple.

And this won't really hurt Apple:
Apple, which changed its tax arrangements with Ireland in 2015, should easily be able to pay the huge tax bill because it has a cash mountain of more than $230bn (£176bn) of cash and securities, mostly held outside the US. The tech group keeps the money outside the US because it would be forced to pay US tax charges if it repatriated the money.
It's pocket change for them, but hopefully this will make further Irish tax shenanigans less common.

I would hope that we would see some more movement in this direction, but the Obama administration, in the person of Jacob Lew, seems determined to prove that only little people pay taxes.


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