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European Union Investigates Apple’s tax benefits in Ireland

September 21st, 2016

 

The European Commission’s three-year investigation of Apple Inc.’s Irish tax benefits will be concluded this week. Apple, an American business, has a firm in Dublin, Ireland.

 

The Irish government has enabled Apple to pay substantially less in taxes than other companies in the European Union. According to BBC News, the standard rate of Irish corporate tax is 12.5 percent, while Apple is paying more than double that amount.

 

After the investigation, the European Commission found that Apple had paid less than or equal to one percent tax on its European profits in recent years.

 

The E.U. claims that Apple has avoided paying “proper” taxes by directing its proceeds through Ireland.

 

Rulings in the Irish government in 1991 and 2007 lowered taxes for Apple, breaking the European Union state-aid rules that said E.U. countries were not allowed to offer preferential treatment to specific firms.

 

It was not, however, in violation of the Ireland tax laws. After the investigation, the European Commission ordered Ireland to recover 13 billion euros ($14.5 billion) from Apple in unpaid taxes.

 

With this ruling, the commission is hoping to curb the common tax avoidance, especially with American firms.

 

However, both Apple and the Irish government did not like this decision and are in the process of appealing it.

 

Ireland’s finance minister Michael Noonan declared in a statement, “I disagree profoundly with the Commission… The decision leaves me no choice but to seek cabinet approval to appeal.”

 

This is necessary to defend the integrity of the tax system, to provide tax certainty to business and to challenge the encroachment of the E.U. state-aid rules into the sovereign member states competence of taxation, ABC News reported.

 

Some political parties such as the Labour Party however, believe that the government should accept the decision and use the money on projects.

 

The European Commission’s three-year investigation of Apple Inc.’s Irish tax benefits will be concluded this week. Apple, an American business, has a firm in Dublin, Ireland.

 

The Irish government has enabled Apple to pay substantially less in taxes than other companies in the European Union. According to BBC News, the standard rate of Irish corporate tax is 12.5 percent, while Apple is paying more than double that amount.

 

After the investigation, the European Commission found that Apple had paid less than or equal to one percent tax on its European profits in recent years.

 

The E.U. claims that Apple has avoided paying “proper” taxes by directing its proceeds through Ireland.

 

Rulings in the Irish government in 1991 and 2007 lowered taxes for Apple, breaking the European Union state-aid rules that said E.U. countries were not allowed to offer preferential treatment to specific firms.

 

It was not, however, in violation of the Ireland tax laws. After the investigation, the European Commission ordered Ireland to recover 13 billion euros ($14.5 billion) from Apple in unpaid taxes.

 

With this ruling, the commission is hoping to curb the common tax avoidance, especially with American firms.

 

However, both Apple and the Irish government did not like this decision and are in the process of appealing it.

 

Ireland’s finance minister Michael Noonan declared in a statement, “I disagree profoundly with the Commission… The decision leaves me no choice but to seek cabinet approval to appeal.”

 

This is necessary to defend the integrity of the tax system, to provide tax certainty to business and to challenge the encroachment of the E.U. state-aid rules into the sovereign member states competence of taxation, ABC News reported.

 

Some political parties such as the Labour Party however, believe that the government should accept the decision and use the money on projects.

 

After three days of negotiations, the Irish government decided to launch their appeal in European courts.

 

The United States and Apple Inc. also disagreed with the decision. A U.S. treasury spokesperson claimed that this ruling could “undermine foreign investment, the business climate in Europe and the important spirit of economic partnership between the U.S. and the E.U.”

 

In a statement to the press, the company stated, “Apple follows the law and pays all of the taxes we owe wherever we operate. We will appeal and we are confident the decision will be overturned.”

 

Ireland’s finance ministry stated it does not give preferential treatment to any companies and does not make deals with taxpayers.

 

Apple is not the only American company to be investigated for back taxes recently. The Commission will defend its decision in court later this week, stating they have structured the case to easily be upheld in court.

 

They vote on Sept. 7th but spokespeople have stated it is unlikely the decision will be appealed.

 

Editor’s Note: BBC News, The New York Times and ABC News was used in this report.