Tax: Irish Government angry at unfair EU treatment of Apple
Tim Cook, Apple's CEO, visited the European Commission's offices in Brussels Thursday to lobby for in effect an amnesty in the investigation of the electronics giant's special or unusual tax arrangements using Irish companies to avoid/ evade massive amounts of tax. Last week Cook won the support of key members of the US Senate Finance Committee who urged Jacob Lew, US Treasury secretary, to warn the European Commission that an adverse finding against Apple could trigger reprisals against European firms operating in the United States. Meanwhile it's reported that the Irish Government is angry about what it views as unfair treatment of Apple by the EU!
Also Thursday, Enda Kenny, taoiseach, in an interview with Bloomberg TV, called the claims that Ireland is a tax haven "false and baseless." How about facilitating tax haven activities?
While Kenny struggles to express himself coherently without a script, like most politicians, he has the gift for tergiversation and mental reservation.
In May 2013 after the US Senate's report on Apple's use of what were termed 'stateless' Irish companies, Michael Collins, then Irish ambassador in Washington DC, sent a letter to Capitol Hill on behalf of the Irish government, stating that Ireland wasn't a tax haven.
Senator Carl Levin and Senator John McCain, responded to the Irish letter:
Most reasonable people would agree that negotiating special tax arrangements that allow companies to pay little or no income tax meets a common-sense definition of a tax haven.
Tim Cook met Margrethe Vestager, the European Commission's competition commissioner, who last October ruled against the Netherlands and Luxembourg in respect of tax incentives that were given to Starbuck and Fiat Finance, which were judged to be unfair state aid.
Last week in its letter to the US Treasury secretary, members of the US Senate Finance Committee wrote:
Our concerns are driven not only by these initial cases, but also by the precedent they will set that could pave the way for the EU to tax the historical earnings of many more U.S. companies — in some cases, the earnings in question could have been generated up to a decade ago. We urge Treasury to intensify its efforts to caution the EU Commission not to reach retroactive results that are inconsistent with internationally accepted standards and that the United States views such results as a direct threat to its interests. We also ask that you consider, under section 891, whether U.S. corporations are being subjected to discriminatory taxation.[ ]
Final decisions on the cases involving Apple and Amazon are expected soon, and both Ireland and Luxembourg have stated their positions that the EU Commission’s state aid allegations are without merit.
In 2014 senators who were members of the committee and were standing for reelection raised over $20m in campaign contributions from business sectors, with over a third from communications/ electronics companies.
In September 2014 the European Commission ruled that Ireland did make special tax deals with Apple. More here:
In fiscal 2012 Apple had a foreign tax rate as low as 2% on the profits from 60% of its revenues — to achieve this low rate when average corporate tax rates in the developed world were at about 25%, required special tax magic and while Time Cook last month called the reality of Apple's tax avoidance "political crap," what in effect he is seeking from the European Commission is a tax amnesty.
Cook sent this tweet after leaving Brussels:
Apple has created over 1.4m jobs across Europe and we're announcing a center for aspiring iOS developers in Italy https://t.co/v9RLYX6u6u— Tim Cook (@tim_cook) January 21, 2016
This is from Apple's regulatory filing in respect of fiscal 2015:
As of September 26, 2015, the Company had approximately 110,000 full-time equivalent employees.
Getting to the truth is a struggle in politics and business — 1.4m jobs across Europe? Someone who submitted an app to the Apple app store is possibly counted as a job when there may have been little income for the person or none.
Neither Apple or the European Commission commented on Thursday's meeting and a ruling from the competition commissioner is expected in March after the Irish general election.
Estimates of the amount of tax that Apple may be forced to pay to Ireland range from $7 to $8bn (Bloomberg) to $19bn (JP Morgan Chase) — the profits were diverted from other countries to Irish shell/ offshore companies that have addresses at Apple's Irish campus in Cork.
The Irish Government doesn't know how many Irish shell/ offshore companies exist in total and a government that falsely claimed in 2012 that the EU rescue fund would assume responsibility for €64bn worth of bank rescue-related public debt, now says it doesn't want any tax windfalls that could arise from the Apple case.
Source: Australian Financial Review
The FT says in a report posted Thursday evening:
Dublin is known to be angry about what it believes is unfair treatment of Apple, and its officials worry Ms Vestager’s staff has changed their legal arguments in the run-up to a decision on whether to order a repayment of back taxes. The Danish commissioner has rejected accusations of bias and argued that she is trying to ensure that EU countries do not give “sweetheart” tax deals to selected multinationals, which would be unavailable to competitors, simply to secure investment.
Maybe Apple should not have to pay any foreign tax?
The company has a cash or near-cash total balance of over $200bn.
On the other hand...directors of a local company that would engage in the same tax avoidance shenanigans would risk imprisonment, disqualification and an intensive revenue audit.
What's sauce for the goose is not sauce for the gander when it comes to taxes in Ireland!
Pic on top: Tim Cook meeting Enda Kenny (right), Dublin, 11 Nov 2015.
Apple's principal Irish company became stateless for tax purposes from 2006 — the Irish authorities were aware of this as a company that had submitted an annual tax return since the early 1980s ceased doing so and was obviously known about.