After the much prolonged investigation into the tax evasion allegations on Apple via a tax pact with the Irish government, the company has finally been convicted. After a case that went on for 3 years, the European Union’s anti-trust body has found the technology giant Apple guilty of making a secret tax pact with the Irish government, and has slapped the company with a fine up to $14.5 billion (€13 billion), plus interest to be paid to the government of Ireland. Interestingly, both of the parties concerned, are likely to appeal against the decision.
CEO of Apple Tim Cook’s response to this decision particularly pointed out the irony of the situation. He said, “This claim has no basis in fact or in law. We never asked for, nor did we receive any special deals. We now find ourselves in the unusual position of being ordered to retroactively pay additional taxes to a government that itself says we don’t owe them any more than we’ve already paid.”
With reference to the state aid rule, which forbids preferential treatment for any individual or an organization, the EU commissioner for competition, Margrethe Vestager found the company guilty. She iterated on the fact that the deal between Apple and the Irish tax authorities working between 1991 and 2007 clearly violated the EU rules stated above. Statistics proving that Apple benefited from this tax deal were presented before the commission, entailing that the company reduced its tax bill from 1% of its European profits in 2003 to 0.005% in 2014 by channelling European sales through Ireland and using this deal. The decision instructs the company to pay back the money they saved from those underhand arrangements from the period 2003 to 2014.
Vestager said in a statement following the verdict: “Member States cannot give tax benefits to selected companies – this is illegal under the EU state-aid rules. 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. In fact, this selective treatment allowed Apple to pay an effective corporate tax rate of 1% on its European profits in 2003 down to 0.005% in 2014.”
The matter of tax evasion allegations is not new at all, and the mega companies around the globe have been watching the case rather keenly. Examples of legal moves against Google in France in May, and in Spain in June were also formed on the basis of alleged tax evasion schemes. A separate action was also taken by the EU against the US giant Google in July 2016 due to reports of alleged anti-competitive behaviour.
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