Apple faces $19.8b Irish tax bill after EU ruling

A file picture dated Jan 27, 2015 of the company's logo at an Apple Store in Washington, DC, US.
A file picture dated Jan 27, 2015 of the company's logo at an Apple Store in Washington, DC, US.PHOTO: EPA

DUBLIN • European Union antitrust regulators ordered Apple yesterday to pay up to €13 billion (S$19.8 billion) in taxes plus interest to the Irish government after ruling that a special scheme to route profits through Ireland was illegal state aid.

The massive sum, 40 times bigger than the previous known demand by the European Commission to a company in such a case, could be reduced, the EU executive said in a statement, if other countries sought more tax themselves from the United States tech giant.

The ruling was immediately slammed by Ireland and Apple - both announcing plans to appeal and taking aim at Brussels for what they described as regulatory overreach that could scare away international companies and stifle economic growth.

Apple paid tax rates on European profits from sales of its iPhone and other devices and services of between just 0.005 per cent in 2014 and 1 per cent in 2003, the commission said.

"Ireland granted illegal tax benefits to Apple, which enabled it to pay substantially less tax than other businesses over many years," said Competition Commissioner Margrethe Vestager, whose crackdown on mainly US multinational companies has angered Washington.

The US Treasury Department slammed the ruling, saying the decision threatened the bilateral "spirit of economic partnership".

The European Commission in 2014 accused Ireland of dodging international tax rules by letting Apple shelter profits worth tens of billions of dollars from tax collectors in return for maintaining jobs.

Apple and Ireland have rejected the accusation.

"The decision leaves me with no choice but to seek Cabinet approval to appeal. This is necessary to defend the integrity of our tax system; to provide tax certainty to business; and to challenge the encroachment of EU state aid rules into the sovereign member state competence of taxation," said Irish Finance Minister Michael Noonan yesterday.

"It's bizarre and it's an exercise in politics by the Competition Commission."

REUTERS, WASHINGTON POST

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A version of this article appeared in the print edition of The Straits Times on August 31, 2016, with the headline 'Apple faces $19.8b Irish tax bill after EU ruling'. Print Edition | Subscribe