Thursday, January 19, 2017

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Apple appeals EU order to collect $14B in back taxes

By on December 19, 2016

CUPERTINO, Calif. — Apple is appealing a European Union (EU) order to collect a record 13 billion euros ($14 billion) in back taxes based on the way it reports European-wide profits through Ireland.

The move follows a similar appeal Sunday by Ireland.

EU Competition Commissioner Margrethe Vestager speaks during a media conference at EU headquarters in Brussels on Tuesday, Aug. 30, 2016. The European Union says Ireland has given illegal tax benefits to Apple Inc. and must now recover the unpaid back taxes from the U.S. technology company, plus interest. (Virginia Mayo/AP)

EU Competition Commissioner Margrethe Vestager speaks during a media conference at EU headquarters in Brussels on Tuesday, Aug. 30, 2016. The European Union said Ireland has given illegal tax benefits to Apple Inc. and must now recover the unpaid back taxes from the U.S. technology company, plus interest. (Virginia Mayo/AP)

Ireland charges the Cupertino, California-based company only for sales within Ireland.

EU Competition Commissioner Margrethe Vestager said the arrangement let Apple use two shell companies incorporated in Ireland to report its Europe-wide profits at effective rates well under 1 percent.

In a statement Monday, Apple said the EU took “unilateral action and retroactively changed the rules, disregarding decades of Irish tax law, U.S. tax law as well as global consensus on tax policy.”

“If their opinion is allowed to stand, Apple would pay 40 percent of all the corporate income tax collected in Ireland, which is unprecedented and, far from leveling the playing field, selectively targets Apple,” Apple said. “This has no basis in fact or law and we’re confident the ruling will be overturned.”

Apple says it has a worldwide income tax rate of around 26 percent.

The Irish and Apple appeals set the stage for a titanic legal battle that has implications for more than 600 U.S. multinationals based in Ireland and thousands more using tax-avoidance vehicles globally.

The EU’s Department of Finance has pledged to close rules permitting shell companies, though global companies could avoid that obstacle by shifting the same accounting strategies to other countries beyond the EU’s wrath.

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