Apple’s effective Irish tax rate of 0.005% described as ‘brazen’ and ‘unsustainable’

After it was revealed that Apple paid an effective tax rate on its European profits of just 0.005% in 2014, a local tax and advisory firm has said that while other multinational companies had similar arrangements with Ireland, Apple’s deal was ‘the most brazen.’ The comment was made by Aisling Donohue, a partner at tax and business advisory firm MGPartners, reports Bloomberg.

The European Commission yesterday ordered the Irish government to recover €13B ($15B) in taxation from Apple after it was ruled to have offered the company illegal tax breaks. Apple is appealing the ruling.

Netflix says that it believes that the type of tax avoidance measures employed by Apple and other U.S. tech companies are ‘unsustainable’ …

About six months ago, Netflix Inc. told an investor that the company will likely pay higher international tax rates than other large U.S. technology companies currently pay. Netflix, which recently began expanding aggressively abroad, said it views other U.S. tech companies’ international tax strategies as unsustainable.

Ireland’s cabinet is due to meet today to decide whether or not it will join Apple in appealing the ruling that Apple must pay an additional €13B in tax.

Bloomberg says that even if Apple loses the case and has to pay the full amount, it is unlikely to leave Ireland.

Ireland’s 12.5 percent corporate rate means it’s still likely to trump the U.S. as a preferred corporate tax domicile. The iPhone maker has been there since opening a factory in Cork in 1980.

The paper also backs my view, expressed in March, that Apple’s tactic of funneling profits on all European sales through Ireland will not be possible in future.

“EU reforms will require income to be taxed where generated through, among other things, new restrictions on use of controlled foreign companies,” wrote Bloomberg Intelligence analyst Sarah Jane Mahmud. 

This would mean that Apple would be taxed on its income in each individual European country. This has already happened in Italy, where Apple agreed to pay tax on $1.3B of revenue earned there.

Commentator’s on yesterday’s opinion piece on the topic largely favor Apple’s position, that it is unreasonable to demand more money than was paid at the time.