EU Orders Apple CEO to Pay 13 billion euros Tax Clampdown
On Tuesday, 30th August, 2016, the European Union ordered to Apple CEO to pay a record 13 billion euros in back taxes in Ireland and said that the deal allowing tech giant to pay almost no tax in Ireland were illegal.
Brussels specified that Apple, which is the world’s most valuable company, had ignored tax bills on virtually all its profits in the region and bloc under its arrangements with Dublin.
Tech firm and Irish government both said that, there will appeal against the European Commission ruling, with the US Capital going so far as to say that the result could undermine its economic partnership with the European Union.
The main problem lies with Ireland’s tax and very attractive tax offering to multinationals, which it has been dating with very favorable tax situations. The European Union Competition Commissioner Margrethe Vestager said that Apple’s tax breaks had broken EU laws on state service.
Margrethe Vestager also said that, “This judgment shows a clear message. Member states cannot give unfair tax benefits to selected companies, no matter if European or foreign, large or small.” He also said that this was not a fine but unpaid taxes to be paid.
Apple, the world’s most valuable company has had a facility in Ireland’s city of Cork since 1980 and works around 5,000 people in the country. However, it routes its international sales in a way that ignores billions in corporation tax.
European Union Competition Commissioner has specified that Apple’s so-called head office in Ireland only available on paper. It had no employees, no buildings and no real activities.
According to result, Apple paid an effective corporate tax rate of 0.005% on its European revenues in 2014.
Ireland – Apple’s Sweetheart Deal:
Ireland has been looking for to attract multinationals by offering extremely favorable tax conditions, known as sweetheart deals.
But European Union opposed to this saying that Ireland's tax benefits to certain companies could be seen as biased.
As a result of Ireland’s tax benefits, Apple paid an effective corporate tax rate of 0.005% on its European revenues in 2014 - equal to 50 euros for every million.