apple tax bombshell

30 Aug

london 10.29pm 20.4C dry tuesday 2016

for years, govts have seen multinational companies escape tax and put their profits off shore. ireland have been complicit in it, giving very low tax rates to entice companies to base themselves in ireland. the EU wants to make it play fair, and  level the playing field, by imposing what ireland should have collected from apple if they had not made sweetheart deals with it.

the other countries in the EU have lost out since they did not offer the same low rates and deals.

in the past the EU have forced ryanair to pay up, with its sweetheart deals with the european airports, so it is part of the clean up that the EU is doing as applied to the multinationals. they will be going for google and amazon next.

you would think usa and other countries would welcome this. usa in fact have the same gripe with apple and other usa companies shifting their offices off shore in tax havens and avoid paying USA taxes. they  should welcome this as it seems to be a winning front on the war against tax shelters which multicompanies can do to avoid paying tax. but USA will lose out if apple pays this euro13billion to ireland, as apple will surely  offset it against any tax that apple need to pay to the USA.

so it boils down to which govt gets the money… that is what they are fighting each other for. for years the EU have wanted to find ways to get the money from these multinationals who can trade freely in europe and not pay tax on their profits. that is what the internet makes it possible.

the EU must be looking at china and wish they could have their own firewall. haha. but short of having that, this way , taxing the profits in ireland is the next best way. ireland have made it possible for apple to avoid tax. and it hasn’t really made much money out of it either… the irish people might like to ask why the irish govt dont want this extra money… it is not even that apple is providing lots of employment in ireland. a lot of people dont like the EU for being very high handed, but i think what they are doing here is correct.  

Following an in-depth state aid investigation launched in June 2014, the European Commission has concluded that two tax rulings issued by Ireland to Apple have substantially and artificially lowered the tax paid by Apple in Ireland since 1991. The rulings endorsed a way to establish the taxable profits for two Irish incorporated companies of the Apple group (Apple Sales International and Apple Operations Europe), which did not correspond to economic reality: almost all sales profits recorded by the two companies were internally attributed to a “head office”. The Commission’s assessment showed that these “head offices” existed only on paper and could not have generated such profits. These profits allocated to the “head offices” were not subject to tax in any country under specific provisions of the Irish tax law, which are no longer in force. As a result of the allocation method endorsed in the tax rulings, Apple only paid an effective corporate tax rate that declined from 1% in 2003 to 0.005% in 2014 on the profits of Apple Sales International.

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