Monday, 07 September 2015 06:00

Apple and Ireland facing $27 billion wrath of EU regulator over tax rort Featured

EC Commissioners EC Commissioners

Apple’s favourable tax treatment in Ireland may soon come to an end as EU regulator the European Commission gets ready to act on findings initially made in June 2014. If the EC does force Ireland to comply with its tax findings, the decision could cost Apple €17 billion (AUD$27 billion) in Ireland alone plus several billion more in countries around the world, including Australia.

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 alleged Irish tax rort was highlighted in a corporate tax avoidance Australian Senate Committee hearing in April this year, where the country manager of Apple was questioned rigorously.

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.

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Stan Beer


Stan Beer co-founded iTWire in 2005. With 30 plus years of experience working in IT and Australian technology media, Beer has published articles in most of the IT publications that have mattered, including the AFR, The Australian, SMH, The Age, as well as a multitude of trade publications.

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