DUBLIN: Apple and the government of Ireland are fighting what some view as a European Union tax grab. The two recently filed a formal appeal of the EC’s decision ordering Apple to pay nearly US$14 billion in back taxes, based on its finding that Ireland had given Apple several illegal tax breaks.
The commission this summer found that Ireland had allowed Apple to determine its tax based on the activities of its subsidiary firms, Apple Sales International and Apple Sales Europe, which are incorporated in Ireland.
That tax approach allowed Apple to pay a much lower tax rate than other firms doing business in Europe, according to the EC.
The Irish government “profoundly disagrees with the commission’s analysis, and had no alternative than to file an appeal to have the entire decision overturned, according to David Byrne, a spokesperson for the Department of Finance in Ireland.
“Ireland did not give favorable tax treatment to Apple,” he told the E-Commerce Times. “Ireland does not do deals with taxpayers.” No fine or penalty has been levied against the Irish state, Byrne said, noting that the EC explicitly stated that the decision does not call into question Ireland’s general tax system or its corporate tax rate.
“The commission will defend its decision in court,” EC spokesperson Ricardo Cardoso told the E-Commerce Times.
The U.S. Treasury Department disagreed with the EC’s findings, suggesting that the commission retroactively applied a new “State Aid” theory opposing established legal principles, challenging individual countries’ tax rules, and threatening to undermine the European business climate. The ruling threatens to erode America’s tax base, according to the DoJ.
The department considers tax avoidance a serious problem around the world, and it will continue to work with the commission and other international partners, such as the OECD, toward the shared goal of preventing the erosion of corporate tax bases.
