“U.S. Treasury Secretary Jacob J. Lew is set to meet with European Union antitrust chief Margrethe Vestager as she prepares to deliver a final verdict on a probe into Apple Inc.’s tax affairs in Ireland,” Stephanie Bodoni and Aoife White report for Bloomberg.
“The showdown comes days after Vestager’s team delivered two possible scenarios on how much tax Apple owes in Ireland, according to two people familiar with the case, who asked not to be identified because the matter is private,” Bodoni and White report. “Lew has contacted Vestager urging her to avoid ordering any collection of back taxes from Apple, according to one of the people.”
“Conflict over trans-Atlantic tax practices escalated in February as Lew complained to European Commission President Jean-Claude Juncker that U.S. firms are unfair targets of state-aid investigations,” Bodoni and White report. “The Treasury Secretary’s letter came after EU enforcement focused on fiscal pacts Apple, Amazon.com Inc. and McDonald’s Corp. have with Ireland and Luxembourg. The companies all say they acted within the law.”
Read more in the full article here.
MacDailyNews Take: Apple followed the law when paying their taxes:
There was no special deal that we cut with Ireland. We simply followed the laws in the country over the 35 years that we have been in Ireland. If the question is, was there ever a ‘quid pro quo’ that we were trying to strike with the Irish government – that was never the case. We’ve always been very transparent with the Irish government that we wanted to be a good corporate citizen… If countries change the tax laws, we will abide by the new laws and we will pay taxes according to those laws. – Apple CFO Luca Maestri
SEE ALSO:
Apple tax probe verdict may come next month Irish Finance Minister Noonan says – June 16, 2016
Irish wonder what to do with Apple tax if EU orders a clawback – June 8, 2016
Apple cash move will not end EU tax probe – April 11, 2016
Analyst: Apple investors unconcerned about potential EU tax bill – April 5, 2016
EU’s Vestager says will not complete tax inquiries of Apple, others in second quarter – May 5, 2015
U.S. demands EU reconsider tax probes of its companies – February 12, 2016
U.S. Treasury official to meet EU antitrust team over Apple tax deals – January 29, 2016
Apple and Google stand by Europe tax deals; Rupert Murdoch weighs in – January 27, 2016
Apple could trigger global tax war, potential breakdown of the international tax system – January 27, 2016
Apple CEO Cook lobbies EU antitrust chief over Irish back taxes – January 21, 2016
Think Ireland’s corporate tax is unfair? Wave goodbye to Apple and thousands of jobs if it’s changed – November 14, 2015
Apple announces 1,000 new jobs in Ireland as EU tax ruling nears – November 11, 2015
Apple tax probe won’t hurt Ireland, Finance Minister Noonan says – October 5, 2015
EU’s Vestager says will not complete tax inquiries of Apple, others in second quarter – May 5, 2015
Apple warns of potential ‘material’ financial damage from European tax probe – April 29, 2015
Apple may have to pay Ireland 10 years of back taxes – April 30, 2015
EU’s plans to tackle corporate tax avoidance hits first roadblocks — February 12, 2015
Ireland’s Prime Minister: Apple has nothing to fear from end of ‘Double Irish’ tax avoidance strategy – November 4, 2014
Change the laws if need be for future taxes, but no fair playing retroactively. They put themselves on tenuous ground making corporations nervous about already paid past tax liabilities.
Imagine if the U.S. instituted much higher import taxes on products from companies like BMW, Volkswagen, Heineken, etc. and then demanded twenty years of back taxes based on that increase.
You’re comparing grapefruit and grapes, trade war. Apple (and others) cut a deal with Ireland which included a reduced tax burden. Apple paid all taxes due under that agreement but the terms of that deal have now been held to be unlawful under EU law – to which Ireland is subject. So while none of this is Apple’s fault, the fact remains that it was an illegal deal which reduced Apple’s tax burden. A better analogy (but still not perfect) would be if your accountant engaged in “creative” tax planning that the IRS subsequently determined was illegal, you would owe taxes all the way back to when the scheme was first implemented. The debt is still yours. The best you can hope for is to try to cut a deal with the tax man.
the fact remains that it was an illegal deal which reduced Apple’s tax burden
That there was any illegality has NOT been determined to be fact, not yet anyway. And, according to Apple, there was no ‘deal’ at all. The fact that Apple has been paying taxes for 35+ years through their headquarters in Ireland does not lend credibility to the EU’s contention. But we’ll see!
Your scenario is illegal in both the USA and the EU. It would require an ‘ex post facto’ law, meaning that when it is enacted it becomes retroactive. That is specifically illegal in the US Constitution, Article 1, Section 9, Clause 3 and Article 1, Section 10, Clause 1 (not that the Constitution means much to #MyStupidGovernment these days) as well as Article 7 of the European Convention on Human Rights.
What’s going on with the EU is a (desperate and repeated) attempt to establish that Apple (or Ireland in coordination with Apple) has been diddling established EU tax law for years. Therefore, they’re attempting to find some way that Apple owes theoretical back taxes under current law.
Three problems: first, the US Constitution does not apply in the EU. Second, Article 7 of the Convention on Human Rights only prohibits retroactivity in criminal prosecutions, not civil actions.
Finally, the EU is arguing that it is just applying the legal framework that was always applicable. If the Irish laws or regulations were in violation of European treaty obligations, they were a nullity from the beginning. Neither the Republic of Ireland nor third parties like Apple were ever subject to the void Irish rules or exempt from the supervening EU rules. So they cannot rely on the void Irish rules as a defense from paying the taxes that were always due under the valid EU rules but erroneously billed.by Ireland.
If the EU is correct in its position—big IF—this is not a case of retroactivity. Apple may have other defenses, but ex post facto is not one of them.
Hey TXUser, you may want to point out that it’s properly called “Article 7 of the European Convention on Human Rights” so as not to confuse those who come from a place where they can simply wave their magic “enemy combatants” wand, circumvent the Geneva convention and totally ignore human rights just like that.
Where I come from, laws that specifically apply to sheep do not apply to pigs. The Geneva Conventions apply, by their very terms, to categories defined quite carefully as soldiers, prisoners of war, and noncombatants. They do not apply to persons who are none of the above.
Somebody who is building bombs and using them to kill people is not a noncombatant and is not entitled to be treated as such. Someone who does not belong to the military of a state actor is not a soldier and is not entitled to be treated as such while in active service, nor as a prisoner of war when captured.
There are certainly good reasons to treat terrorists as human beings who deserve some moral consideration as such. However, they are not expressly protected by the same international treaties that cover ordinary civilians and government military members.
In the wake of 9/11/2001, the US and other nations had to develop their own rules for dealing with people who were manifestly dangerous, but were neither noncombatants nor military. You obviously don’t like the rules they developed, just like Apple and Ireland do not like the EU tax rules. Unfortunately, any ordered society has to have rules of some sort and social cohesion requires us to acknowledge even the rules we do not like
Thanks for the insightful reply TxUser, It’s always a pleasure to read. I hope my reply carries the same value.
Your reply mentions soldiers, prisoners of war and non-combatants but you neglected to mention that it also covers unlawful combatants who retains rights and privileges under the Fourth Geneva Convention so that they must be “treated with humanity and, in case of trial, shall not be deprived of the rights of fair and regular trial”. Essentially your nation exclusively used the term “enemy combatant” at the time which allowed that country to circumvent the need to treat these people as they should be treated (as unlawful combatants). Your nation like a child having a temper tantrum wanted to have carte blanche so that you could do what wanted to do to them, and that included torturing them and denying them of any human rights. It’s certainly clear to anyone with a sense of morality that this is a crime, ooops an act against humanity.
It is a shinning example of how one can defend the lack of morality with superior weaponry.
It isn’t the first time your country has pulled a stunt like this. You point out features of ordered societies having rules and having to acknowledge them even when you don’t like it but you do not mention the alternative, one that your nation has clearly demonstrated many times. Don’t like a white flag? Ignore it. Don’t like a democratically elected government? Destroy it, as in the case of the first 9-11 a horrendous terrorist act guided by your nation. Don’t like the way a democratic UN vote is going to go? Ignore and go have your war.
There was once another nation that thought along those lines and ignored the Geneva convention (they never signed it) and tortured soldiers as part of their tactics. They paid a great price for their acts against humanity and rest assured, your nation will pay an even greater price. Hopefully then your nation will wake up and grow a spine.
You assume that the persons detained at Guantanamo qualify under the Geneva Conventions as “unlawful combatants,” essentially persons who pursue armed conflict in violation of the laws of war. That is disputed. However, even if they do, the Conventions are clear that they are not entitled to the status of a prisoner of war, but are to be dealt with in accordance with the laws of the detaining nation.
The only rights they have under the Fourth Convention are, as you say, to be “treated with humanity and, in case of trial, shall not be deprived of the rights of fair and regular trial”
There is no definition of “treating with humanity.” Presumably, that is to be determined—along with everything else—according to the laws of the detaining nation. Whether those laws conform to international standards of “humanity” could, presumably, be determined by an international court of some sort… assuming that the detaining nation had submitted to the jurisdiction of that court in some recognized way.
There is no right to trial. The convention only provides that if the detaining nation has a trial in accordance with its own laws, that trial must be a “fair and regular trial.” Again, that is to be determined in the first instance by the laws of the detaining nation unless those laws violate an international treaty obligation in some way… as determined by a tribunal with jurisdiction over the detaining nation.
So, it is essentially as I stated above.
Again thanks for the time you took to answer. Unfortunately as we reply to each other our answers get squished. This dispute is by whom exactly as the definition you provide is pretty close to what the detainees possibly could be, though there is no proof that many of the detainees at Guantanamo were indeed combatants of any kind.
I’m also shocked and dismayed that such a bureaucratic pedantic organization of people that come up with the Geneva convention would omit something as essential a definition as “treating with humanity”. At any rate I had a lot of doubt that any definition would allow for the torture and other treatment that occurred there, but hey without a definition, kinda gives your nation carte blanche to do what you wanted to do to them, especially not that your country has abandoned the term “enemy combatants” these people don’t have a definition of who and what they are, so you can do what you want to them with impunity. Well played, but then again you know how sleazy I think your country is.
No right to trial? Oh that’s a great one. It sounds to me that you are saying that a trial must be a fair and regular trial but they have no right to a trial. More smoke and mirrors to circumvent the situation allowing your country to keep these people for over a decade without a trial, heck without even being charged.
I’m so glad I went into the study of universal laws, human laws appear to be a real joke and a dance of semantics.
All right, thanks for clearing that up for me. I keep on reading up about this stuff and listen to this and that but at the end of the day, “legal” or not, the actions performed by citizens of your country on behalf of your country to those people at Guantanamo Resort on the Bay are a clear indication to me of a total lack of morality and ethics, especially sad since you should know better.
See you round, keep making those great posts. I’m a big fan and very appreciative of what you write, so even though I may not reply it’s thumbs up all the way.
Mr. Lew only cares because any tax payable overseas reduces the US tax Apple has to pay
Man, Great Britain got outta that mess just in the nick of time.
two possible scenarios on how much tax Apple owes in Ireland…
IOW: No definitive answer. What a joke.
Apple has every legal and moral ground to appeal and overturn any determination of taxes owed, that should be deemed gross overstepping of authority, law and blatant, deliberate interference with prospective economic advantage.
Apple should fight this in every international court possible until it wins, which without doubt it will.
European revenge for the US taking punitive action against BP – when Haliburton that was running the rig and who were responsible for its safe use.
Suck it up cupcakes.
One sure result of Brexit, is now the US will not have the UK on it’s side when it comes to EU-US disputes. The UK has been a poodle to the US for too long.
This is why Apple and other US internationals should be happy to pay more taxes. Look at the level of government service they get.