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European Commission slams Apple for back taxes, sets sights on Google

The European Commission has had Apple's taxes under a microscope for the past three years, and they've finally determined that their behavior is illegal.

Published onAugust 30, 2016

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The European Commission has just completed a three-year investigation into Apple’s taxes, and they’ve determined that the benefits the company receives from Irish banking entities are illegal. As a result, Apple will have to pay 13 billion euros to Ireland, and a precedent is now set that puts other massive multinational companies like Google in a tight spot.

What’s interesting is that Ireland has no interest in collecting the money. Finance minister Michael Noonan has gone on record saying, “I disagree profoundly with the Commission… 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.”

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Apple is unsurprisingly in the same boat claiming, “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 company went further to say that the Commission’s case is needlessly aggressive and harmful to the economy:

The European Commission has launched an effort to rewrite Apple’s history in Europe, ignore Ireland’s tax laws and upend the international tax system in the process.

The Commission is standing their ground, stating that Apple’s taxable profits “did not correspond to economic reality.” The current corporate tax rate in Ireland is 12.5 percent. In 2003, the European Commission concluded that Apple paid a mere 1 percent in taxes, and that in 2014 they paid less than .01 percent.

The Commission says that all they are doing is requiring Apple to pay taxes that they would have owed anyway. “The Commission’s investigation concluded that Ireland granted illegal tax benefits to Apple, which enabled it to pay substantially less tax than other businesses over many years.”

Apple’s taxable profits did not correspond to economic reality.

The reason that Ireland doesn’t want Apple to have to pay these back taxes is that their leniency on international businesses drives a lot of commerce through their system. In the aftermath of this Apple decision, the Commission is gearing up to investigate Google in a similar capacity.

What are your thoughts regarding the European Commission cracking down on tech titans’ taxes? Should big corporations be able to get away with such extreme tax benefits because their business creates jobs and profit in the areas where they feel most welcome, or should the rules still apply to entities that are ‘too big to fail’? Give us your take in the comments below!

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