Ireland’s alleged tax favor to Apple could spell trouble for the country, who could now be taken to court. On Wednesday, the European Commission said that Ireland has failed to recover 13 billion euros (US$15.3 billion) in unpaid Apple taxes from the U.S. firm, and thus, it might take Ireland to court, according to Reuters.
On Wednesday, Competition Commissioner Margrethe Vestager said, “More than one year after the commission adopted this decision, Ireland has still not recovered the money, also not in part. But member states need to make sufficient progress to restore competition.”
In August 2016, after the Commission found that Apple received illegal state aid, the Ireland authorities were ordered to collect the unpaid Apple taxes. The Commission alleged that between 1991 and 2007 Apple got an unfair advantage, as Irish revenue commissioners allowed the company to transfer income from the European countries through two “non-resident” head office subsidiaries, which were based in Ireland. The Commission also claimed that the U.S. firm was offered a comparatively lower tax rate than what other companies were paying.
Ireland refuted the claims, saying the rates offered to Apple were available to all, and there has been no violation of Irish or European laws. Ireland at that time vowed to appeal against the European Commission’s ruling. In its defense, Ireland’s finance ministry said they do not agree with the Commission’s founding in Apple’s case, but agreed to collect unpaid Apple taxes pending Dublin’s own appeal of the ruling, notes MacRumors.
In a statement, the ministry said, “It is extremely regrettable that the Commission has taken this action, especially in relation to a case with such a large-scale recovery amount.”
Previously, Apple’s general counsel Bruce Sewell said that the company is being targeted to generate headlines, and the method used to calculate the fine is unfair. If a reasonable categorization is chosen to calculate the fine, though Apple would still have disputed the claims, the final number would have been much lower, the executive noted. Earlier, CEO Tim Cook also said that the ruling has “no basis in fact or in law,” and is meant for ‘targeting’ Apple.
There are reports that the U.S. government may now intervene in the proceedings. The European Commission’s case will be heard sometime next year, but before that the Commission wants Apple to give the disputed amount back to Ireland. The money will be returned if Apple wins the appeal.
In recent years it has been seen that Member States (not the companies themselves) are being targeted for the tax and revenue issues. This is partly because of the nature of violations, where the countries are often alleged of relaxing tax norms or even overlooking some tax evasion to attract big companies to do business in the country. Such preferential treatment helps the country with jobs and other social and economic contributions to the economy.
It must be noted that at almost the exact time when the tax investigations were intensifying in 2015, Apple announced a massive renewable energy data center in Ireland, notes TechCrunch.
At 9.35 a.m. Eastern, Apple shares were down 0.52% at $153.68. Year to date, the stock is up almost 33% while in the last one-year, it is up almost 36%.