Apple “was accused by the European Commission this week of striking ‘sweetheart’ agreements with the Irish government dating back to 1991 in which the terms under which Apple would be taxed were effectively dictated by the company. The Commission alleges these agreements enabled Apple to avoid paying hundreds of millions of dollars in corporate taxes potentially owed to the Irish state,” Vincent Boland reports for Financial Times. “In return for minimal tax bills, the allegation continues, Apple poured investment into Ireland, and Cork in particular. That has created some 4,000 jobs over the past three decades at the plant in the Hollyhill industrial estate.”
“Apple and the Irish government deny there are any sweetheart deals related to ‘transfer pricing,’ and the company is adamant that it pays all the taxes owes on the operations it carries out behind Hollyhill’s corporate-grey walls. And many people in the ‘real capital of Ireland,’ as the people of Cork like to think of their city, are ready to defend their prized foreign investor,” Boland reports. “At Cork’s magnificent City Hall, mayor Mary Shields… [said], ‘I would prefer if companies complied with the tax laws of the countries they are in, as I believe Apple are doing,’ she says… ‘Obviously,’ she adds, ‘other countries would love to have Apple. But they are in Cork and we want to keep them here.'”
Read more in the full article here.
Related articles:
U.K. Treasury chief Osborne tells U.S. tech giants: Read my lips, more taxes – September 29, 2014
Irish taxes: There is no possibility of a fine upon Apple whatsoever – September 29, 2014
EU watchdog to give reasons for inquiry into Ireland’s tax treatment of Apple – September 29, 2014
European Commission accuses Apple of prospering from illegal Irish tax deals – September 28, 2014
EU threatens expanded probe into Ireland’s tax practices regarding Apple, Googles, other companies – June 20, 2014
EU’s investigation of Apple’s taxes isn’t going to cause the company any problems – June 13, 2014
EU launches tax avoidance investigations on Apple, Starbucks, Fiat – June 11, 2014
Not in Taxes anymore: On site at Apple’s famous Irish ‘headquarters’ – November 2, 2013
Regan: U.S. tax code spurs loveless foreign corporate ‘marriages’ – May 13, 2014
Ireland to close Apple’s tax loophole, but leave bigger one open – October 15, 2013
G20 think tank OECD proposes blueprint for global crackdown on tax avoidance – July 19, 2013
Thomas Sowell on Apple, corporate taxes, and ‘the road to serfdom’ – May 28, 2013
Taxing Apple just taxes you – May 24, 2013
Don’t tax Apple, tax its shareholders – May 24, 2013
If Apple paid more tax, we might pay less or something – May 22, 2013
Apple CEO Tim Cook pounds another nail into the Keynesian coffin – May 22, 2013
Apple CEO Cook makes no apology for company’s tax strategy – May 22, 2013
Let’s be honest, this has nothing to do with legality.
This is a blatant money grab by the EU.
Yes hoping disingenuous sensationalistic headlines will do their work for them.
I am not defending apples behavior but this is pretty common behavior for multinational companies. They run wholly owned subsidiaries in the countries the operate and use transfer pricing to shift profits and tax burdens to the desired locations. The answer is not to blame companies for gaming the system. Just fix it the make sure the companies comply with the new rules. It is fair enough for companies to use lower corporate tax rates to attract companies to invest and employ people but using artificial transfer pricing to shift profits from one country to another and avoid paying legitimate tax on profits earned in the country you earned them is wrong. Apple gets picked on because it makes the most money but this happens with the majority of multinational corporations.
Just a minor correction:
It is not “gaming the system”, they are “simply following the laws created by the law makers”.
buzz, I do not pretend to be an expert here, but most of us are not.
However, there is a big difference in following the law and cheating the law and hoping no one notices. When a company follows the law of the country they are in, they follow the law.
Just because someone else in a different country does not like it makes no matter. If this is an issue between Ireland and the EU, cool. When they get their shit straightened out, tell Apple what the new law is and move forward.
As I understand it, Apple pays all taxes in Europe that are due. Sales taxes, value added taxes (what a crock of shit there), etc. What they do with the profit is their business. If they chose to move the money to a bank elsewhere that is their business.
Just like the crooks in america, we want a company to do business overseas and bring the money back here where we can tax it a third or forth time. Cause, you know, we are greedy.
I say kudos to Apple and Ireland. Tell the EU commission to go sit on it.
Just saying.
Tax rates are just plain too high. That’s the answer. Governments need to spend less and tax less. God Bkess Ireland!
Imagine foreign made profits coming into the USA from ALL US companies. The revenue generation alone would more than make up for cutting the tax rate to a sane level. Or so I surmise. It’s plain old idiocy to encourage foreign made profits to stay foreign, which is what #MyStupidGovernment is doing.
The problem is that the Fortune 100 all have found ways to avoid taxes almost altogether. Cutting the rate in half would still be more than they pay today. Add the fact that these are the same companies who benefit the most from the current state of affairs and thus have lobbyist working to keep it that way. No Fortune 100 company makes offshoring based on taxes ALONE, but can be a significant part of the equation. Of course if you eliminated all Corporate Tax and just taxed dividend income as ordinary income that would solve the issue.
Bingo! Give that man a cigar.
How to decide if taxes are too high. Its not just taxes. Spending is the real question.
Proper government spending has enough and improper is being reduced.
Ireland seems happy. Therefore taxes and spending. are within reason.
How to decide if you have the right amount of spending and revenues: Decide what you need to spend on and adjust accordingly. Do we need the ability to fight two wars simultaneously? Should we keep seniors out of poverty? Is it profitable to invest in building or fixing bridges? Reducing pollution?
If you ask the majority of the population what we should spend money on, the government would see a large increase.
I hope this episode proves instructive for Americans who currently know little to nothing about European politics. Ireland has clearly traded various incentives to Apple in exchange for Apple investments in the local economy. Whether that was a good deal should be a matter for the Irish electorate and whether it was legal should be an issue for the Irish courts. However, the European Commission has decided that it is the superior sovereignty and has the right to dictate public policy to the Republic of Ireland and its executive, legislative, and judicial branches.
Before the Great Recession, Ireland was an economic powerhouse and the Commission would not have dared to fool with it. Since the Recession, Ireland is much weaker and less able to defend itself from attacks by the Commission and the powers (notably Germany and France) that drive the EU. Their argument is that if Ireland hadn’t offered illegal incentives, the Apple money might have been invested in one of them.
The Commission chooses to frame this as if—absent the deal—the extra taxes would have been paid to Ireland. In fact, the company would never have gone to Cork in 1991 without the deal. The taxable income would have stayed in Britain or on the Continent. Apple would have paid them more and Ireland would have received nothing. Note that the Commission does not propose that Apple repay Ireland, only that it pay massive fines to the Commission. (The words “shake” and “down” occur to me.)
To reiterate a post I made a few days ago, this sort of thing is the logical result when a society chooses to have its affairs run by unelected technocrats with no political accountability.
Do you really believe politicians are more honest than technocrats? Politicians are accountable only to the 1% who pay for their elections.
I think you have a few facts wrong here. Ireland benefits from free trade agreements within the EU as a member state. Those benefits come with certain regulations. Every country is guilty of some level of infraction of not following those regulations and it is just when one gets too public or too large monetary wise that you will see something like this. Tomorrow, Ireland to vote to leave the EU and this would be moot. That won’t happen because of what they would lose.
America has Senate hearings and the EU has their Commission – in both cases it’s just politicians bloviating over the mess ‘they’ have created.
If the consensus is there, they will change it.
In the real world?…no chance.
I have no opinion on the EU versus Irish sovereignty issues as I live in New Zealand. I think you may however be missing part of the problem. If a company has a subsidiary in Germany that sells phones and makes a profit then the German government should rightfully expect that company to pay tax on that profit in Germany. If instead the company also sets up a subsidiary in a lower tax company such as Ireland and sells the phones from the Irish company to the German company at an artificially high price meaning that the German company ends up making no profit. Irish company makes a huge profit but tax on that profit is low. The benefit to Ireland is not tax revenue from said phone company but income tax from the employees the phone company hires in Ireland in exchange for the low corporate tax rate. This is a problem for many countries and difficult to fix. The answer may be to set limits and ostracize countries that offer deals below agreed levels on a similar way to countries that allow money laundering.
I do not get all the hysteria. This is business as usual. Didn’t Texas just offer all sorts of breaks to get Tesla to open a battery plant? And it seems Nevada beat them. It is not uncommon in the US for cities and states to give “job creators” lots of benefits just to get the jobs. How is Ireland different?
agree. i live in new mexico and we offered tesla all kinds of incentives, as we have done in the past to intel, etc. we just fell short this time. what about cities building stadiums for millionaire owners? i don’t get why these similarities haven’t been commented on much in the press.
Ireland is part of the EU and as a consequence have to abide by certain regulations that cover this (or at least that is the commissions argument). This is mostly a show and nothing much will come of it, actually nothing will. However, if tomorrow Ireland sign similar deal with another major company the size of Apple, you would then see the shit hit the fan and Ireland would be fined or forced to leave the EU.
IF ONLY: #MyStupidGovernment would get the clue that foreign made profits are NOT coming into the USA specifically because of the exorbitant tax rate being charged. But with dumTards like Carl Levin running the show in Congress, this isn’t going to change.
Change #MyStupidGovernment to #MyStupidSenate for any chance of tax reform legislation making it to the president’s desk. Then there’s the final step and great unknown: #MyStupidVetoPen …
No, I heartily include the horror we call the House of Representatives. As I often say: If you think the current rendition of the ‘Republicans’ has anything positive to offer the USA, you’re either deeply deluded, paid to think so, or out of your mind.
Here come the flames…
Folks moving out of high tax states to lower tax states, is the same as companies moving to countries with lower taxes. So, would you ask those families that move to send taxes back to their high tax states they left?
Remember, our tax code calls taxes voluntary; yeah right. Companies have obligations to their investors, they also pay all the taxes that are required by the tax code. Companies are a tax collecting arm of the government. To acquire the money to pay taxes they must build it into their prices. For those of you never running a company or small business all this may come as a shock. Also, companies must do all they can, within the law, lowering expenses; that is their obligation.
Okay, you say that is not my issue, well it is, especially if you have their stock, own mutual funds, have retirement plans such as 401K and the like. Those are all tied to the price of stocks on the NASDAQ, S&P 500, DOW, and the like.
Do be aware it is the tax code that is at issue not the companies. Now, if you think companies need to pay more taxes, then when you pay your annual taxes you should also pay more than is required by your family.
Guess which company pays the most in taxes to the U.S. Treasury? If you guessed Apple, then you would be correct.
Who would ever have guessed the company that makes the most profit pays the most tax. Surely that is as it should be.