Over the weekend the Irish press has been reporting that the EC will act against Ireland within months and force it to recoup 10 years worth of tax from Apple, which has admitted to paying an effective tax rate of just 2% in the country over that period.
Under the arrangement that Apple has with Ireland, the corporate colossus uses the country as its global distributor in exchange for paying a minuscule tax rate. The effect on countries such as Australia is that the local subsidiary, which buys products such as iPhones and iPads from the Irish subsidiary for an artificially high price, makes an abnormally low profit and therefore pays an effective low tax rate.
The Australian Government, however, has yet to act against Apple and other tech multinationals accused of tax rorts, such as Google and Microsoft.
Quoted in the Irish Times over the weekend, a representative of an Irish law firm postulated that the EC is likely to act against Ireland and force it to recoup tax from Apple.
“The commission’s initial findings appear to be quite robust,” said Marco Hickey, head of EU, competition and regulated markets at Irish law firm LK Shields. “Based on that, it would seem that they’re more minded than not to make a negative final decision against Ireland.”
If the EC acts against Ireland and Apple, the company will throw every legal resource it has at its disposal against any negative ruling, as the financial repercussions of such a ruling would be catastrophic for the company globally.