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IrelandApple Refuses to Pay Ireland $14 Billion in Back Taxes—And the Irish Don’t Want It

00:50  18 september  2019
00:50  18 september  2019 Source:   observer.com

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Apple CEO Tim Cook said the EU’s ruling ignored how the international tax system works. Justin Sullivan/Getty Images. On Tuesday, a group of Apple lawyers argued in Luxembourg at a European Union court in a bid to reverse a European Commission (EC)

E.U. antitrust regulators order Apple to pay up to $ 14 .5 billion in taxes plus interest to the Irish government after ruling that a special scheme to European authorities ruled Tuesday that Apple owes more than $ 14 .5 billion in back taxes after striking a sweetheart deal with Ireland that allowed.

Apple Refuses to Pay Ireland $14 Billion in Back Taxes—And the Irish Don’t Want It Barcelona, Spain - September 26, 2016: Apple Store At Catalonia Square (Plaza Catalunya) in Barcelona in a neoclassic architecture building.

On Tuesday, a group of Apple lawyers argued in Luxembourg at a European Union court in a bid to reverse a European Commission (EC) ruling from three years ago about billions of dollars in back taxes Apple allegedly owed Ireland, which Apple now refuses to pay and Ireland doesn’t want.

In 2016, after two years of investigation into Apple’s tax practices in Europe, the EC concluded that Apple had paid substantially less taxes in Ireland, home to its European headquarters, than it should have for years by clever financial engineering.

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Apple hit with $ 14 .5B bill in back taxes . The European Commission on Tuesday ordered the Irish government to recover up to 13 billion euros ($ 14 .5 billion ) — plus interest — in back taxes "The Commission's case is not about how much Apple pays in taxes , it 's about which government collects

Apple was hit with the largest regulatory fine in European history when the company was ordered to pay Ireland a stunning $ 14 .5 billion in back taxes . So why don ’ t the Irish want the money? If Apple is forced to pay the tax , the payment would be treated as a windfall gain and the government

Specifically, the European agency claimed that Apple had rerouted most of the profits it had recorded through its two Irish branches—Apple Sales International and Apple Operations Europe—to a shell “head office.” Because this “head office” only existed on paper and couldn’t generate actual profits, the income that was shifted there was exempt from corporate taxes under certain provisions of the Irish tax law.

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Apple Refuses to Pay Ireland $14 Billion in Back Taxes—And the Irish Don’t Want It

Between 2003 and 2014, the European Commission found, Apple had lowered its effective corporate tax rate from 1% to just 0.005%. Counting all unpaid taxes over this period, plus interests, the agency ordered Apple to pay $14.3 billion in back taxes to the Irish government.

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“ Ireland has been instructed by the European Commission to recover up to €13 billion of alleged state aid from the company covering a ten year period Ireland ’s position remains that the full amount of tax was paid in this case and no state aid was provided. “ Ireland did not give favorable tax treatment to

E.U. antitrust regulators order Apple to pay up to $ 14 .5 billion in taxes plus interest to the Irish government after ruling that a special scheme to European authorities ruled Tuesday that Apple owes more than $ 14 .5 billion in back taxes after striking a sweetheart deal with Ireland that allowed

Apple now claims that the tax bill “defies reality and common sense,” the company said in a court filing Tuesday morning.

Apple’s lawyers argued that the ruling essentially meant that “all of Apple’s profits from all of its sales outside the Americas must be attributed to two branches in Ireland,” Daniel Beard, one of the lawyers representing Apple on the case, told the EU General Court on Tuesday, Reuters reported.

Apple CEO Tim Cook made similar arguments back in 2016 when the ruling first came out.

Apple Refuses to Pay Ireland $14 Billion in Back Taxes—And the Irish Don’t Want It © Copyright 2019, dpa (www.dpa.de). Alle Rechte vorbehalten 10 September 2019, US, Cupertino: Tim Cook, managing director of Apple, talks to visitors of the launch event after his performance on the stage of the Steve Jobs Theater on the company campus. Photo: Christoph Dernbach/dpa (Photo by Christoph Dernbach/picture alliance via Getty Images)

“The European Commission has launched an effort to rewrite Apple’s history in Europe, ignore Ireland’s tax laws and upend the international tax system in the process,” he wrote in a letter to Apple customers in August of 2016. “In Apple’s case, nearly all of our research and development takes place in California, so the vast majority of our profits are taxed in the United States. European companies doing business in the U.S. are taxed according to the same principle. But the commission is now calling to retroactively change those rules.”

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EU Apple Must Pay 13B Euros in Back Taxes Tim Cook responds to $ 14 .5B Irish tax bill with open letter Apple ordered to repay £11 billion in Ireland after EU investigation rules tax deal illegal Understanding Apple 's tax mess: Why Apple owes $ 14 .5 billion , and why Ireland doesn' t want it A

So why doesn' t Ireland want such a huge cash windfall? It is important to understand that foreign direct investment Refusing a cash windfall that could boost the country's entire national budget is a difficult political ask Apple and Ireland . €13bn. demanded in back taxes . Media captionMs Vestager said the Irish tax system "allowed profits to be attributed to a head office that only existed on paper."

Siding with Apple, lawyers representing the state of Ireland said the EU had misinterpreted Irish tax laws and that its 2016 ruling was “fundamentally flawed,” Paul Gallagher, a lawyer for Ireland told the court on Tuesday, per Reuters.

Ireland is one of the world’s largest tax havens for multinational corporations. Although the country has a corporate tax rate of 12.5% (still lower than America’s 21%), its generous BEPS (base erosion and and profit shifting) tools, commonly used in corporate tax planning, allow foreign companies to achieve an effective tax rate of between 0% to 2.5% on global profits rerouted to Ireland though tax treaty networks.

This helps explain the prevalence of “phantom capital,” or foreign investments that have no real business operations, in Ireland. According to a recent IMF study, two-thirds of Ireland’s foreign direct investment are “phantom capital,” which are simply set up to minimize tax bills.

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