Apple Tax issues in Ireland

fez

fez

fez

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I had a search and couldn't find anything about this on the forums so thought I would start the discussion.

Apple have funnelled a lot of their profits through Ireland due to a very preferential tax rate of ~2% which is much less than the 12.5% Ireland normally uses. This has lead to a European commission investigation into this "deal" between apple and Ireland and the ruling has come back that it is illegal.

Personally I think that tax law is a complete mess and that if you make money in a country, you pay tax in that country. No ifs or buts.

What I don't understand about this ruling is that it suggest that Ireland should now get £x billion in owed back taxes from Apple. That seems like a ridiculous way to deal with this. Punish Apple and give the other party involved in the illegal behaviour a pat on the back essentially.

Surely these tax proceeds should go elsewhere based on where the revenue was generated. I know thats not how tax works but Ireland gave them this preferential rate to encourage Apple to invest in Ireland and generate much much more in tax than they would have if they simply applied their standard rate of tax. Its encouraging people to flout the laws and try to circumvent them knowing that if they get caught its simply a second pay day for themselves.

Am I misreading this entirely or is the whole thing a complete con.
 
I think it comes under state aid. So its equivalent to Ireland handing Apple €13bn. So Apple has to return that money.

It is also to prevent such sweetheart deals being made in the future.

Ireland might benefit as a consequence but this isn't about punishing or rewarding anyone. Ireland will actually contest this as they will suddenly lose their competitive advantage of providing tax abitrage.

As for taxing stuff where they are sold, that is extremely difficult when it comes to profits in a world where countries trade with each other.
 
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fez said:
I had a search and couldn't find anything about this on the forums so thought I would start the discussion.

Apple have funnelled a lot of their profits through Ireland due to a very preferential tax rate of ~2% which is much less than the 12.5% Ireland normally uses. This has lead to a European commission investigation into this "deal" between apple and Ireland and the ruling has come back that it is illegal.

Personally I think that tax law is a complete mess and that if you make money in a country, you pay tax in that country. No ifs or buts.

What I don't understand about this ruling is that it suggest that Ireland should now get £x billion in owed back taxes from Apple. That seems like a ridiculous way to deal with this. Punish Apple and give the other party involved in the illegal behaviour a pat on the back essentially.

Surely these tax proceeds should go elsewhere based on where the revenue was generated. I know thats not how tax works but Ireland gave them this preferential rate to encourage Apple to invest in Ireland and generate much much more in tax than they would have if they simply applied their standard rate of tax. Its encouraging people to flout the laws and try to circumvent them knowing that if they get caught its simply a second pay day for themselves.

Am I misreading this entirely or is the whole thing a complete con.
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the problem is iirc the investigation has ruled it "undue aid" not avoided tax. think of it as the government effectively giving them a grant/low interest loan.

so the money has to be paid back. but apple will then claim the higher rate of tax they have paid in Ireland and then claim that back from the taxes they paid in the USA (they paid more in the foreign country so now have been overtaxed by the USA which deducts foreign tax) so effectively its going to be the US government paying Ireland back.

which is annoying the americans
 
I cant agree more. If a company makes £100m in the UK it should be taxed fairly and accordingly and not given nice "sweet deals". Google had this somewhat recently, what was it 3% tax rate? Italy squeezed 8% out of them when they actually should have paid far far more.

More proof of a Corporatist society.
 
Only true Tefal if Apple actually repatriate foreign profits, which they haven't.

Otherwise Apple would never even have bothered with such tax deals.
 
What I love about this is the indigence of the Irish over the announcement.

They're basically bemoaning the EU's interference in their sovereign tax laws.

Is this the same Ireland that's been singing the praises of the EU for so long and is so proud to be remaining a member in the aftermath of the Brexit vote?

The EU's state aid rules have been clear for years and Ireland have obviously flouted them. You can't just pick and choose what EU rules and laws you want to obey and which you don't like and class them as "interference" in your sovereign affairs.

If you don't like it maybe you should have a referendum on leaving yourselves Ireland!
 
Tefal said:
they do repatriate some of their earnings, as do Amazon and starbucks.

who are also being targeted in this, which is making the US treasury very angry as they know they're going to pay for it.

https://www.theguardian.com/technology/2016/aug/24/apple-taxes-european-commission
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Some is a massive overstatement. They have repatriated very little and are waiting for an amnesty. Apple instead of paying dividends using the foreign cash they hold, borrow money to pay dividends.

This is all tax Apple should have been paying in the individual repsective countries anyway. Now they may think twice about setting up sweetheart deals in order to avoid that. It was never the US treasury's money.
 
muon said:
Only true Tefal if Apple actually repatriate foreign profits, which they haven't.

Otherwise Apple would never even have bothered with such tax deals.
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No, America taxes on repatriation of cash as well as when the profits are first generated. Tefal was correct in his statement subject to the US rules on amending prior periods.
 
Have they done anything wrong?

Seems to me that these tax loopholes exist, but then countries complain when they are exploited. Perhaps there should be something built in to law that says x% of profits must be funnelled back in to the economy, if you don't want businesses exploiting these :confused:
 
Why would you repatriate overseas profits back to the USA and get taxed at 35% for the privilege?

Those profits never involved the USA as the devices were made in China and distributed & sold by a European company.
 
Pudney said:
No, America taxes on repatriation of cash as well as when the profits are first generated. Tefal was correct in his statement subject to the US rules on amending prior periods.
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How can you tax profits when first generated and also at repatriation?

Companies don't pay 70% corporation tax.
 
EVH said:
Have they done anything wrong?

Seems to me that these tax loopholes exist, but then countries complain when they are exploited. Perhaps there should be something built in to law that says x% of profits must be funnelled back in to the economy, if you don't want businesses exploiting these :confused:
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Exactly. Junker has been very quiet about Luxembourg's tax policies during this debacle.
 
EVH said:
Have they done anything wrong?

Seems to me that these tax loopholes exist, but then countries complain when they are exploited. Perhaps there should be something built in to law that says x% of profits must be funnelled back in to the economy, if you don't want businesses exploiting these :confused:
Click to expand...

Ireland's tax arrangements with Apple have been found to be illegal. Apple can try to claim they've done nothing wrong and complied with all laws but, if those laws are themselves illegal, where does that leave Apple?

Apple are guilty as sin IMHO. They knew full well that what they were doing was dodgy at best and downright illegal at worst but just turned a blind eye to it. Their "we comply with all tax laws" rhetoric isn't going to wash this time.
 
EVH said:
Have they done anything wrong?

Seems to me that these tax loopholes exist, but then countries complain when they are exploited. Perhaps there should be something built in to law that says x% of profits must be funnelled back in to the economy, if you don't want businesses exploiting these :confused:
Click to expand...

Ireland specifically created a loophole with deal. (I believe such deals have been stopped now)

That's the problem. If you have a tax treaty with another country, you need to rely on them not screwing you over.
 
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