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Brussels and Apple trade claims over Irish tax row

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Brussels and Apple trade claims over Irish tax row

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The verbal sparring continues between Brussels and Apple over the 13 billion euro tax bill the European Commission has ruled it must pay to the Irish government.

Apple’s Chief Executive Tim Cook has disputed the tax figures presented by the European Competition Commissioner and insisted that it pays a global tax rate of 26.1 percent.

He told Irish state radio RTE: “It’s maddening, it’s disappointing. It’s clear that this comes from a political place. It has no basis in fact or in law. When you are accused of doing something that is so foreign to your values it brings out an outrage in you. That is how we feel. Apple has always been about doing the right thing. Never the easy thing.”

He added: “It is very easy to see what our tax rate is and our tax payments. We disclose them publicly worldwide. Anybody can look at those.”

Based on facts

European Competition Commissioner Margrethe Vestager rejected Cook’s argument saying the demand is based on facts including evidence given to US congressional hearings into Apple’s tax affairs: “The figures that we use in our decision are the figures that we get from Apple themselves. And some of the figures back from 2011 come from the US hearings. There are very, very little, if any, figures in the public domain. And our investigation is not into the Apple corporation as such, it is Apple Sales International and Apple Operations Europe. And that it is where the figures of – in some years – 0.005% of tax rate are accurate.”

Vestager said those two Apple subsidiaries received favourable tax treatment and put the profits on sales from Europe, the Middle East, Africa and India into Ireland.

It was the US Congressional investigation into Apple’s tax practices that got the Competition Commissioner looking at how that worked and led to the Irish ruling.

Battle lines forming

In Paris, French Finance Minister Michel Sapin backed Vestager’s view that Apple’s Irish tax arrangements amounted to abnormal state aid. “The European Commission is doing its job,” he told a news conference. “It’s normal to make Apple pay normal taxes.”

German Economy Minister Sigmar Gabriel also supported the Commission on Tuesday. However, Britain – which voted in June to leave the EU – has stayed out of the row, saying it is an issue for the Irish government, Apple and the Commission.

Washington has lined up with Apple, accusing the European Union of trying to grab tax revenue that should go to the US government.

Vestager has said she will meet US Treasury Secretary Jack Lew in Washington in September to further discuss the Apple case.

She also indicated said more cases could follow: “It is only when tax rulings are used as a tool to give illegal state aid that we take an issue and we get the concern and we start asking more detailed questions and we eventually may open cases, which is also to say that, you know, we have two open cases right now, McDonald’s and Amazon, but I will not preclude that there cannot be more cases. That depends on what we find when we ask more questions.”

Call for review of multinationals’ tax

In Ireland itself, the government and public opinion are divided over whether to take the 13 billion euro windfall – which would fund the country’s health system for a year – or reject it in the hope of maintaining a low tax regime that has attracted many multinationals and created jobs.

A group of independent lawmakers, whose support is crucial to the minority coalition’s survival, called for a review of how tax is collected from multinationals. Their reluctance to back an appeal against the ruling has cast doubt on whether Ireland will challenge Vestager’s decision.

Irish Finance Minister Michael Noonan has insisted Dublin would appeal any adverse ruling ever since the EU investigation began in 2014.

However, the cabinet failed to agree on Wednesday whether to accept his recommendation due to misgivings among the five-strong Independent Alliance group of lawmakers.

“I don’t think Apple have paid sufficient tax. I don’t think they’ve been illegal in what they’ve done, it’s the tax system as it’s set up,” said Alliance member John Halligan, a junior minister who is not a cabinet member.

“The Independent Alliance have asked that we review our intake of tax, how we take tax in from multinationals and (assess) are we collecting fair tax,” he told RTE radio.

After five hours of discussion on Wednesday, the Irish cabinet adjourned discussion of an appeal until Friday when the government said a decision would be made. Any failure of the Alliance to come on board would cast doubt on the Irish government’s survival prospects.

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