American tech company Apple Inc. owes up to $14.6 billion in back taxes to Ireland in response to having operated at a deflated tax rate, according to the European Commission.
The Commission, an association based in Brussels, Belgium, issued the tax ruling in late August. Apple, it was revealed, had been paying profit tax at one percent between 2003 and 2014. Money they would have owed to the state of Ireland was instead circulated through the company during this time.
The corporate tax rate in the United States is 35 percent, while Ireland, home of one of the lowest corporate tax rates in Europe, is at twelve percent. Both Apple and the Irish government have appealed the decision. The $14.6 billion is equivalent to approximately two thirds of Ireland’s annual public spending, according to the International Committee of the Fourth International (ICFI).
"What I feel strongly about is that this decision was politically based, of that I'm very confident. There is no reason for it in fact or in law," Apple CEO Tim Cook said. “This is a huge overreach that represents retrospective activity and is completely unfair.”
Although this case has garnered particular media attention to the popularity of Apple both in America and abroad, NHS Economics teacher Edward Obloj pointed out that instances of such “inversion” are not altogether rare.
“As far as transatlantic relations, this could mean that other companies may have to pay more in taxes,” he said. “The bigger implication though is that in the United States some of these companies are getting away without paying taxes, while in Europe they’re actually making them pay.”
“So I could see, potentially, if you have somebody like Bernie Sanders ever get their revolution off the ground, that will try to get more taxes out of American corporations,” Obloj said.
“But there’s a lot of loopholes in America,” he said. “I could see them [the European Commission] going after companies such as Google or other big American corporations that they feel are getting a lot of money from Europe but not paying their fair share. But Europe has always been that way; Europe has always been much tighter on it’s corporations,” Obloj said.
The conversation on the issue has been ongoing at every level of government in the US. “Any ruling that is inconsistent with international tax standards and harms American business abroad with retroactive measures is inherently unfair and encroaches on U.S. tax jurisdiction,” Utah Senator and chairman of the Senate Finance Committee Orrin Hatch said.
The decision has been strongly opposed not only by Apple, but by the respective governments of the United States and Ireland.
The European Commission classified Irish dealings in the case as “illegal state aid.” An unsuccessful appeal would threaten to overhaul the tax structure in Ireland, something the government is fearful would lead to other foreign companies hesitating to invest in their economy.
The United States, meanwhile, reaffirmed that they would support American corporations abroad, citing a need to foster healthy international relations.
Apple is not the first American corporation to face questions over their presence in Europe, however. In recent months, popular chains such as Starbucks and Fiat Chrysler have been dealt similar tax bills following illegal dealings overseas.
Transatlantic tensions, it appears, are continuing to rise following the withdrawal of the United Kingdom from the European Union after the vote in June 2016.
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