At a time when Apple Inc. (NASDAQ:AAPL) and other big multinationals are under scrutiny in the US for dodging taxes or repatriating funds stored abroad, a French society of authors, composers, and music publishers (SACEM) revealed that Apple Inc. (NASDAQ:AAPL) owes them around 5 million euros in unpaid taxes, the news was reported first by RudeBaguette.com.
The tax liability stems from the unpaid royalties on iPad sales for year 2011. France and other EU countries impose a certain tax on devices that are used for transferring and displaying copyrighted material.
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What Is This Tax, And Why Apple Is Charged?
The copie privée is a tax that includes all devices that can “transfer, read, or otherwise make use of copyrighted material.” Tax goes to the SACEM, which then distributed it accordingly among authors, creators, producers, actors, etc. In Apple Inc. (NASDAQ:AAPL)’s case, the problem is that the iPhone maker charged this tax to consumers, but it didn’t return it to SACEM.
EU tightening norms
The incident comes amid reports claiming that French authorities are also planning to crack down on companies including Apple Inc. (NASDAQ:AAPL), Google Inc (NASDAQ:GOOG) etc to provide more details of foreign business activities and tax practices.
EU Tax Commissioner Algirdas Semeta, last month, proposed stern measures to end the tax havens for large technology multinationals. The tax commissioner claimed that ‘loose agreements’ between some of the EU countries and companies allow the large firms to transfer their income from EU countries to tax heavens.
Irish Govt. Letter Denied Claims For Apple
Meanwhile, in the US investigations over the Apple Inc. (NASDAQ:AAPL) tax issues, a letter has been sent by the Irish Government to the US senator detailing how companies use Ireland to avoid tax.
The letter, carrying the sign of Ambassador Michael Collins, was sent to Senator Carl Levin on Thursday. The letter denied claims that Apple Inc. (NASDAQ:AAPL) was given any preferential treatment for paying minimum taxes on its Irish business.
“Ireland’s tax system is set out in statute, so there is no possibility of individual special tax rates,” the letter claims.
Earlier, Apple Inc. (NASDAQ:AAPL)’s chief executive Tim Cook told that there was no “special deal to give Apple Inc. (NASDAQ:AAPL) a flat tax rate of 2 percent” in Ireland. This comment refutes what he told earlier to Senate committee under oath.