Ireland has been a tax haven for software companies for a really long time. Things remained the same even when its neighbour the UK, recently decided to exit the European Union (EU) as well. But things are now gradually coming under the EU’s scanner and is asking companies to pay up. And who better to start with other than one of the world’s most talked about tech giant, Apple.
The European Commission has just laid down the rules stating that Ireland should recover up to €13 billion from the Cupertino giant in back taxes.
In case you missed it, that’s Euros we’re talking about and by all means it’s not a small amount, not even for a company as big as Apple. The same came across after a three-year investigation reports the BBC.
And there’s plenty of reasons behind the same. According to the Commission, Ireland allowed the company to pay “substantially less than other businesses” resulting in corporate tax rate of no more than a meagre 1 percent.
Apple is said to have taken a stance against the same and since this comes from the European Union, Ireland too disagreed with the decision. Both companies now plan an appeal against it.
According to the Commission its problem with Apple and Ireland lies in the fact that Apple was given special tax benefits which is illegal under EU state aid rules.
“Member states cannot give tax benefits to selected companies – this is illegal under EU state aid rules,” said Commissioner Margarethe Vestager according to the BBC.
So if Apple has to pay Ireland €13 billion, what’s Ireland’s problem? Well, its problem is to do with the fact the Commission decides which government collects the money.
Apple put out a statement commenting on the same, “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.” The Irish Government soon followed suit agreeing to a appeal as well. But its grounds for an appeal come from defending its tax system.
The odd bit here is how as Apple for all these years seems to have gotten away with just 1 percent tax when the standard Irish corporate is 12.5 percent. Is Ireland defending its tax system? Or Apple? The EU certainly thinks both are to blame.
All of this comes just a week before Apple’s iPhone 7 event that is scheduled to take place on 7 September.