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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 has agreed to dip into its multibillion-dollar cash pile to pay Ireland .4 billion in back taxes — a ruling CEO Tim Cook has called “total political crap.” At issue is whether Apple avoided tax on its foreign profits, which were recorded by its Irish subsidiaries and lightly taxed .

The European Union on Tuesday ordered Ireland to collect $ 14 .5 billion in unpaid taxes from Apple , a record penalty that worsened tensions with the Europe’s competition enforcer said that Apple ’s illegal deals with the Irish government allowed the technology giant to pay virtually nothing on its European

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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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

So why don ’ t the Irish want the money? However, in a peculiarly Irish twist, the government in Dublin is to appeal a ruling by the European Commission’s powerful competition regulator that the tech giant Apple must pay the country a staggering $ 14 .5 billion in back taxes .

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 granted illegal tax benefits to Apple , which enabled it to pay substantially less tax than other businesses over many years,” said Competition Commission Margrethe Vestager, whose Other companies ordered to pay back taxes in Belgium, many of them European, have not disclosed figures.

billion ) in back taxes it was ordered to pay Ireland last year, following the landmark decision to Irish Finance Minister Paschal Donohoe then announced today that Ireland expected money from and expeditiously with Ireland on the process the European Commission has mandated,” Apple said

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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ordering Apple to pay $ 14 .5 billion (technically €13 billion ) in back taxes plus interest (another € The theory here is that Apple and Ireland (or Amazon and Luxembourg, or Starbucks and the Why are the Irish saying they don ’ t want Apple ’s money? The Irish government would, of course, be glad

Apple ’s billions in back taxes could cover the entire annual Irish health budget, build about 100,000 homes for the poor or pay off a chunk of the nation’s debt. Irish Finance Minister Michael Noonan on Tuesday vowed to fight a European Commission ruling that could force the world’s richest company to

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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