Tax Stories August 2, 2018

South Korea – home to Samsung – has announced plans to impose new taxes on Apple, Amazon, Google and other global tech companies.

Locally-based companies have complained that it’s unfair that foreign companies pay little or no taxes in the country, saying that this creates ‘reverse discrimination’ against local brands. Samsung has been struggling to compete with Apple and Chinese brands, admitting to disappointing sales of its flagship Galaxy S9 smartphone …

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Tax Stories November 7, 2017

Apple is once again being accused of tax avoidance. This time, it’s analysis of the so-called ‘paradise papers,’ a massive leak of financial documents relating to countries commonly used as offshore tax havens.

The BBC claims that, once Apple was unable to use an Irish tax arrangement to reduce its tax obligations, it looked for a similar arrangement elsewhere.

The world’s most profitable firm has a secretive new structure that would enable it to continue avoiding billions in taxes, the Paradise Papers show.

They reveal how Apple sidestepped a 2013 crackdown on its controversial Irish tax practices by actively shopping around for a tax haven. It then moved the firm holding most of its untaxed offshore cash, now $252bn, to the Channel Island of Jersey.

This is just the latest in a long history of tax avoidance allegations against the company …

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Tax Stories August 17, 2017

Irish government says it will collect the €13B ($15B) back-tax from Apple but under protest

The Irish government has said that it will comply with an EU ruling and collect €13 billion in back-tax from Apple, but is doing so under protest …

Tax Stories July 13, 2017

A French court has ruled against the country’s own tax authority, and decided that Google need not pay a €1.11B ($1.27B) tax bill. Although the ruling so far applies only to Google and only in France, it sets a precedent that could influence other cases in Europe.

In particular, the case has striking similarities to that involving Apple …

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Tax Stories March 21, 2017

Apple has come under fire in New Zealand after it was revealed that it had paid no tax whatsoever in the country for the past decade, despite selling more than NZ$4.2B ($2.96B) worth of products in the country. The NZ Herald said that the company’s tax arrangements had been criticized by parties across the political spectrum.

Green Party co-leader James Shaw said Apple was not paying its fair share. “It is absolutely extraordinary that they are able to get away with paying zero tax in this country. I really like Apple products – they’re incredibly innovative – but it looks like their tax department is even more innovative than their product designers,” Shaw said … 

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Tax Stories November 9, 2016

Irish government formally submits appeal against €13B Apple tax ruling

The Irish government is today formally appealing against a European Union ruling that it should have claimed an additional €13B in tax from Apple, which has its European headquarters in the country. The EU ruled that offering Apple a sweetheart tax rate of just 2.5% amounted to illegal state aid.

Tax Stories October 10, 2016

Majority of Irish voters back Apple and Irish government in opposing EU tax ruling – poll

A poll for the Irish Times found that the majority of Irish voters believe that the government is right to join Apple in appealing against the EU ruling that the Cupertino company must pay €13B ($14.5B) in back taxes.

Tax Stories September 26, 2016

Apple’s lack of lobbying presence in Europe left it in dark over tax investigation for two years – WSJ

Apple’s lack of lobbying presence in Europe left in largely in the dark about the long-running investigation into its Irish tax arrangements, argues the WSJ. It has been ruled that Apple underpaid tax in Europe to the tune of €13B ($15B).

Tax Stories September 12, 2016

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Apple Store, Amsterdam

While Ireland may not want the €13B ($15B) the EU says Apple owes in underpaid tax, it seems other European countries do. Germany’s DW reports from a summit of European finance ministers that at least four countries have ‘expressed an interest’ in claiming their share.

Dutch Finance Minister Jeroen Dijsselbloem appeared to be first in line, warning Apple on Saturday to “get ready” to pay up. His comment came after a two-day meeting of his EU counterparts in the Slovak capital, Bratislava […]

Other EU countries, including Austria, Italy and France, are following the case closely, and expressing interest in a possible payout, according to Austria’s Finance Minister Hans Joerg Schelling, who spoke on the sidelines of the two-day summit.

There is already precedent for such claims …

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Tax Stories September 5, 2016

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There’s no sign of let-up in the war of words over the European Commission’s demand that Apple should pay an extra €13B ($15B) in taxes on its European sales. After Tim Cook last week described the tax ruling as ‘political crap,’ the EC has hit back with some strong words of its own.

The WSJ quotes Eurofinance head Jeroen Dijsselbloem stating that Apple had failed to understand the public mood in Europe …

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Tax Stories September 1, 2016

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Earlier in the week, Apple was hit by a European Commission ruling to the tune of 13 billion euros in back taxes to Ireland. Apple immediately refuted any wrongdoing and has already said the Irish government will appeal. Apple CEO Tim Cook has continued this tirade today in the Irish press, with a newspaper column in the Independent and a rare radio interview (with RTE’s Paschal Sheehy).

Cook does not hold back on his language. He says the 0.005% effective tax rate bandied about by the Commission is false and “total political crap”. He says Apple actually paid $400 million to Ireland in the same year and believes it was the largest taxpayer in the country that year.

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Tax Stories August 31, 2016

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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’ …

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Tax Stories June 27, 2016

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Apple Store in Covent Garden, London

With a long-running EU investigation into the legality of Apple’s tax arrangements in Europe still showing no signs of reaching a conclusion, the size of last year’s UK tax bill isn’t likely to help its cause. Apple’s latest accounts show that it paid just £12.9M ($17M) in UK corporation tax despite making an estimated £2B ($2.6B) profit in the country.

As the Mail Online notes, this is the equivalent of just two hours’ profits on its global sales …

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Tax Stories March 16, 2016

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Called before the European Parliament’s tax committee yesterday to explain its tax arrangements, Apple’s VP of European operations denied that the company received illegal state aid, reports Bloomberg.

“We feel that we’ve paid every cent of tax that is due in Ireland,” Cathy Kearney said at the European Parliament in Brussels. “We don’t feel that there has been state aid involved and I suppose we look forward to that outcome happening at the end of the day and being vindicated in that way. I would say that the Irish government also agrees with that view.”

Kearney also denied suggestions that the special tax deal with the Irish company was the reason it had chosen the country as its European HQ …

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Tax Stories March 15, 2016

Pressure on Apple over European tax affairs ramps up as European Parliament seeks explanations

With a long-running investigation into the legality of Apple’s tax arrangements in Europe not expected to end any time soon, the company will come under additional pressure tomorrow when it is called before the European Parliament’s tax committee.

Tax Stories March 9, 2016

LONDON, ENGLAND - APRIL 22: A general view of Apples' Regent St store on Earth Day at Regent Street on April 22, 2015 in London, England. (Photo by Ben A. Pruchnie/Getty Images for Apple)

The European Union warned us this week not to expect a speedy conclusion to the long-running investigation into the legality of Apple’s tax arrangements in Europe. The delay follows a decision back in December to expand the scope of the investigation.

But while the wheels of EU tax investigations may grind exceedingly slowly, I’d be willing to wager quite large sums of money on the final outcome. It looks to me increasingly clear that Apple’s tax arrangements with the Irish government are going to be declared illegal, and that Apple is going to be faced with a significant bill for unpaid tax …

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Tax Stories March 7, 2016

EU competition chief warns “don’t hold your breath” on $8B investigation into Apple’s tax affairs

European Union competition chief Margrethe Vestager has warned reporters not to expect a quick decision from the investigation into whether or not Apple’s tax arrangements in Europe are legal, reports Bloomberg.

“Don’t hold your breath,” she told reporters in Brussels on Monday about the timing of decisions targeting Apple and online shopping giant Amazon.com Inc, whose tax affairs in Luxembourg are also under intense scrutiny. “I’m just warning you.”

Apple uses Ireland as its European headquarters, funneling most revenue through the country, where it has a special arrangement with the Irish government to pay corporation tax of just 2.5%. The EU believes this arrangement may be illegal for two reasons …

Tax Stories February 9, 2016

Russia wants to force Apple & Google to pay more tax, apply 18% VAT to App Store purchases

In what Bloomberg describes as ‘a 90-minute interview peppered with expletives,’ Russia’s new Internet advisor has said that he wants to force Apple and Google to pay more taxes.

German Klimenko is pushing to raise taxes on U.S. companies to help level the playing field for Russian competitors such as Yandex and Mail.ru […]

Bloomberg says that he has an interesting ally in this aim …

Tax Stories January 27, 2016

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A report earlier this month from Bloomberg claimed that Apple could owe more than $8 billion in back taxes if the European Commission rules that its Ireland setup is illegal. Speaking to the Financial Times today, Apple CFO Luca Maestri commented on the ongoing European investigation and said that he estimates Apple will have to pay $0 in back taxes, assuming the investigation outcome is “fair.”

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Tax Stories January 21, 2016

Tim Cook in Augsburg, Germany inspecting panels for Apple Campus 2

Tim Cook this week met with the European Commission’s antitrust chief Margrethe Vestager, Bloomberg reports and Kristin Huguet, a spokeswoman at Apple, confirms. The Cupertino based company is fighting back against contentions that they have formed a special agreement with Ireland in which they pay significantly lower taxes to the country’s government. The news also appears to coincide with Tim Cook’s announcement in launching an iOS development center in Italy.

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Tax Stories January 15, 2016

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With a recent European Commission ruling making it look more likely than ever that Apple’s tax arrangements in Ireland will be declared illegal, Bloomberg has been doing the sums on how much the company may owe in back tax. The total? More than $8 billion.

Apple funnels all its European revenue through Ireland, where a special agreement with the Irish government means that it pays just 2.5% tax instead of the normal 12.5%. A long-running European Commission investigation into the legality of this arrangement was recently extended and expanded its scope.

Assuming the agreement is ruled to be illegal, it would be the Irish government – and not Apple – who broke the law, but Apple would still have to pay the difference between the tax it actually paid and the full amount that would have been due without the deal. The company warned shareholders last year that it may have to pay ‘material’ back taxes, but the figure calculated by Bloomberg is much larger than earlier estimates …

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Tax Stories January 11, 2016

Belgian ruling increases likelihood that AAPL’s sweetheart tax deal in Ireland will be ruled illegal

The European Commission has ruled that tax breaks offered by Belgium to multinational companies are illegal, and that the companies concerned must pay the full rate of tax due in the country, reports VentureBeat. This follows similar decisions in Luxembourg and the Netherlands.

While none of these rulings directly impact Apple, they do make it look extremely likely that the Commission will reach the same decision in Ireland, where Apple pays just 2.5% corporation tax instead of the normal 12.5%.

The Irish government offered Apple the special deal in order to encourage the company to choose the country as its European headquarters. The European Commission has been running a lengthy investigation into the legality of this arrangement, and has recently extended and expanded its scope.

If Ireland is indeed found to have broken the law, Apple will have to pay the difference in tax for up to ten years. The total amount was estimated last year at $2.5 billion. Apple warned shareholders at the time that it may face ‘material’ back taxes should the decision go against it.

The EC isn’t the only entity unhappy with Apple’s tax arrangements in Ireland either. The Italian government accused Apple of failing to declare more than $1.3 billion of corporation tax in the country as a result of funneling profits through to Ireland. Apple, which has 16 retail stores in the country, recently agreed to pay the full €318M ($347M) claimed by the Italian tax office.

Photo: AP Photo/Rick Rycroft

Tax Stories December 30, 2015

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Apple, which was accused by the Italian government of failing to declare more than $1.3B of income when paying corporation tax in the country, has now agreed to pay the full €318M ($347M) claimed by the Italian tax office. The company has 16 Apple Stores in Italy.

Apple was accused of funnelling profits from Italian sales through its Irish subsidiary in order to benefit from the lower tax rate the company had agreed there. (Those tax arrangements are the subject of a separate EU investigation.)

La Repubblica (via The Local) reports Apple Italia was listed as a “consultant” for Apple Ireland, enabling the company to book profits through Ireland, paying just 2.5% tax under the terms of an agreement said to have first been reached with Steve Jobs back in the 1980s …

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Tax Stories December 14, 2015

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The long-running investigation into the legality of Apple’s tax arrangements in Ireland has been expanded, with the European Commission now seeking additional information from the Irish government, reports the FT. This means that the investigation is likely to be extended well into next year. A ruling had originally been expected before the end of the year.

While Irish authorities had expected the case to be concluded soon, they have instead been sent bulky sets of supplementary questions, meaning it will be difficult to reach a final verdict until after the 2016 election, which is expected as early as February […]

The Irish finance ministry confirmed that the government was supplying the requested additional information to the commission. “We do not expect any decision until after the new year,” said a spokesman.

If the ruling goes against Apple, it could face a bill for billions of Euros in underpaid tax …

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