Tim Cook has posted an open letter on Apple.com for customers, in response to the European judgement that Ireland must recover 13 billion euros in tax revenue from Apple, covering the period 2003-2014. In the public posting, Cook lambasts the judgement as having serious consequences on European business. It says the ruling suggests Apple received a special deal on our taxes which has “no basis in fact or in law”. Cook says Apple is being compelled to pay back taxes to a government that states Apple does not owe any additional money.
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Cook frames the judgement as the European Commission meddling in Irish business, replacing Irish policy with its own. Apparently, Ireland and the United States agree that company profits should be taxed in the country where the value is created.
Most of Apple’s research and development efforts take place in California so most company profits are taxed in the United States. He says the Commission wants to retroactively change the rules to collect more money in its own region.
Cook says Apple pays all tax it legally owes and is the largest taxpayer in Ireland, the largest taxpayer in the United States and the largest taxpayer in the world. The current arrangement with Ireland stems back almost forty years when Apple opened offices in Cork, Ireland. It started with 60 employees and — thanks to its success — has created 1.5 million jobs in Europe overall.
The Commission’s ruling, if enforced, would have crippling after-effects on European investment and job creation according to Cook.
Beyond the obvious targeting of Apple, the most profound and harmful effect of this ruling will be on investment and job creation in Europe. Using the Commission’s theory, every company in Ireland and across Europe is suddenly at risk of being subjected to taxes under laws that never existed.
Apple is appealing the judgement so it remains to be seen whether this comes into effect, of course. Tim Cook closes his letter by reaffirming Apple’s desire to have international tax reform. He notes that any change will happen through legal processes and only apply going forward, a clear dig at the European ruling which he characterises as changing the law retroactively.
Apple will continue to invest in Ireland despite the ruling. This includes the development of a new data center in the country.
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