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Apple Set to Cough Up $16 Billion in Back Taxes to Ireland

Advice

Apple is renown worldwide as a brand worth reckoning. They have helped revolutionize the smartphone market and promoted an uptake in wearable technologies. Often times, they tend to receive positive press. However, the latest developments from Jobs’ brainchild company paint a not so rosy picture. At present, Apple is entangled in a legal battle with EU authorities over lack of tax payment in Ireland.

Niall Cody, the Irish Revenue Commissioners chairperson, informed a parliamentary committee that his office was going to tax Apple up to $16 billion, or something in that “ballpark”

It is important to note that Apple already agreed to cough up the sums in December after it was ordered by the European Union to play fair ball. The EU urged Ireland to pressure Apple to pay up the sums. Interestingly, a multi-year investigation instigated by the Brussels-based commission brought to light a number of loopholes that Apple used in order to avoid paying taxes. The loopholes existed in the form of Irish subsidiaries that the investigating body termed as being unfair state aid.

Already, both Apple and Ireland have appealed against the EU. Tim Cook, the Apple CEO has categorically called out the commission for their ruling. Just last year, he termed the move as “total political crap” when interviewed by major local media houses.

Waiting Game

While Ireland is set to collect the funds, there’s the very real possibility that the monies may be refunded back. According to Irish Finance Minister Paschal Donohoe, the appeal process is going to begin this fall. Amazingly, Donohoe remarked that he was fundamentally opposed to the ruling. All the same, he exclaimed that he would comply with the ruling and collect the funds.

In a 2016 letter, Cook exclaimed that they had found themselves in a situation where they were being forced to cough up the dough to a government that claims that they don’t owe them anything. He described the entire situation as bizarre.

Before everything clears up, the next two months will see Apple put billions in back taxes in an escrow account. Joh Hogan, the assistant secretary of the Tax Division of the Department of Finance, revealed this information. The official reports indicate that no other countries had made claims to any of the taxes.

As per the Irish Finance Ministry, the monies will be dispensed right after the General Court of the European Union make known its decision. Apple is expected to commence making the payments as early as this quarter. The 2-month timeframe will allow the entire amount to be deposited by the end of the third quarter. Since the monies are going to be paid bitwise, additional interest amounts are going to be tabulated after the first €13 billion is collected.

Vast Wealth

While the amounts payable to Ireland are humongous, Apple won’t sweat the fine. Given the stature of Apple in the world markets, the amounts won’t leave much of a dent in their vaults.

Apple officials have revealed that they already had the money for payment. At present, the company is lucrative enough to have about $285.1 billion in cash and marketable securities. This data was compiled from Apple’s last earnings report

 The weight of the accusation has compelled Apple to pay up without any grudges. As per the Brussels-based investigators, Apple committed the offenses between 1991 and 2007. Allegedly, they had an understanding with Ireland to bypass some laws in order for them to put themselves up in Ireland.

Apple is said to have moved income from the European market through two non-resident head office subsidiaries situated in Ireland. In response, Apple claimed that the investigators had made fundamental errors in their findings.

Going forward, Apple has made plans to repatriate its foreign cash reserves in response to the newly implemented US tax laws. The legislation stipulates that the corporate tax rate will drop to 15.5 percent. While this is a significant development, it is not expected to have any effect on the verdict of their EU entanglement.

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