Connect
To Top

Apple Pays First $15.3B in Back Taxes to Ireland

Advice

Last Friday, Paschal Donohoe, the country’s finance minister informed members of the press that Apple registered the first 1.5 billion euros down payment of the $15.3 billion it owed Ireland in back taxes.

The EU had made a decision in 2016 that Apple had to pay the multi-billion dollar figures after it had made a couple of unfair tax arrangements with Ireland

In compliance with the EU’s ruling, Apple is set to continue making the payments to Ireland through escrow accounts. Meanwhile, the European Union continues to pressure Ireland to recover the monies, they have continually done so since 2016 when they came to a consensus.

Notably, other American tech companies are going to be affected by the recent ruling by the EU. Over the last year, the commission has handed out fines to Facebook and Google over a myriad of issues. Facebook was forced to pay a $122 fine for presenting misleading statements about its acquisition of popular messaging company WhatsApp. On the other hand, Google was compelled to pay a $2.7 billion fine after raising a number of antitrust concerns.

Background

The EU imposed the fine after making discovery of the fact that Ireland had given the multinational company incentives in order to set up base in Ireland

They discovered that Ireland had given Apple illegal State aid by helping it not have to pay up effective 1% in corporation tax. They felt that by making Apple pay up some amounts would be a good way to mitigate the issue. The commision announced that it was ready to take Ireland to the European Court of Justice after making claims that the nation was intentionally delaying attempts to recoup the vast amounts owed. At present, Apple and the Government of Ireland are engaged in talks to appeal the commission’s ruling on the grounds that their favorable treatment by Irish authorities did not break any Irish or European Union laws.

Until the situation is resolved, copious amounts received will remain locked in an escrow account. Notably, the funds will not be released until there is a full determination on the matter by the European courts. This decision was reached once Apple decided to take the matter before the European courts.

A number of banks have been chosen to proceed as tenderers for the provision of monetary services. The banks include the Bank of New York Mellon,  Amundi, London branch, and Goldman Sachs Asset Management Internation.

Stance

Addressing reporters, Tim Cook, the Apple CEO referred to the Commission’s charges as “maddening” and promised to pursue the matter right to the very end

In a statement to reporters, Donohoe confirmed that the first batch had been received and that future payment would be made to fund successive quarters in 2018, as previously agreed. The finance minister concluded his statement by saying that there would be no further statements released on the State aid issue until full recovery of monies is made. The next statements are expected to be made after the end of Q3, 2018.

Ireland usually has an open economy that encourages low corporate taxation and a host of other incentives in order to attract multinational companies to set up shop. The only issue with Apple’s scenario is that the amounts received were significantly below 12.5% of imposed incomes.

The Government typically opposes any efforts to force changes in taxation practices. Thanks to their efforts, numerous world’s top financial and technological firms have set up shop in Dublin. Following Donohoe’s announcement, he made a point to reiterate the Government’s stance on the fundamental disagreement between the commision and Apple. Despite their opposition to the whole saga, the Government of Ireland is determined to remain compliant to binding legal obligations.

More inAdvice

Related Items

You must be logged in to post a comment Login