European Commission May Charge Apple $8bn in Back TaxesAdded: Sunday, January 17th, 2016
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The recent ruling of the EC in Belgium in regard to tax breaks for multinational corporations means that Apple could owe a huge amount of money in back taxes following the result of the open investigation against its activities in Ireland.
The European Commission has long been trying to crack down on American companies that tried to settle with individual EU member nations for the last years. Apple is far not the only affected international company: Starbucks’s operations in the Netherlands and Amazon’s and McDonalds’ operations in Luxembourg have also been subject to similar investigations.
For example, according to the European Commission, Starbucks owed Dutch authorities upwards of $22 million. Moreover, the most recent ruling from Belgium found out that 35 companies across the European Union owe the equivalent of $760m in back taxes.
In response, Apple claimed it would appeal a ruling, while the company’s CEO called the investigation “political crap” and assured that Apple paid every tax dollar it owed. However, Apple might not be the direct recipient of a fine, because the subject of the investigation is actually the Irish government. The problem is that taking into account the state of the Irish economy and its national debt, the government of Ireland may try to recover money from the tech giant.
The industry watchers remind that it is not the first time the company has been investigated for its accounting practices in the EU. Apple executives appeared before the US Senate two years ago to testify about whether the company had renegotiated Ireland’s 12.5% corporate tax rate down to 2%. At that rate, Apple would owe $8.02bn. It should also be noted that the Apple investigation was recently extended, so the judgment from the regulator won’t arrive in time to affect the Irish election.
The European Commission explained that the Belgian “excess profit” tax scheme, applicable for the last decade, allowed certain multinational corporations to pay substantially less tax in the country on the basis of tax rulings. It reduced the corporate tax base of the groups by between 50% and 90% to discount for “excess profits” that allegedly result from being part of a multinational company. Following the in-depth investigation of the European Commission launched a year ago, the scheme was found to derogate from normal practice under Belgian company tax rules and the “arm’s length principle” and therefore violated EU state aid rules.
Sunday, January 17th, 2016No comments
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