The decision by the European Union to require Ireland to recover nearly 13,000 million euros (about US $ 14,500 million) in taxes that Apple Inc. would have saved over a decade is not just a headache for the giant Silicon Valley and the Celtic country, it can deepen the conflict between the US and the EU on the scrutiny of the block to the tax practices of US firms.
the magnitude of the amount he demanded in a formal decision by antitrust regulators also sounded alerts multinationals can now that
This is pay large sums for taxes allegedly avoided paying.
the higher payment required under EU rules prohibiting companies to gain competitive advantage over their rivals through the help of a government .
Both Apple and the Irish government announced that they will appeal the decision to initiate proceedings before the highest European court that could last several years. The ruling, however, may trigger a confrontation between the US and various EU countries on the right to collect taxes on the billions of dollars that the big American conglomerates earn outside their country.
The antitrust EU agency said the Irish government allowed the US technology company avoid almost all taxes to be paid within the block for more than a decade. The pacts that the Irish government offered to Apple in 1991 and 2007 would have allowed the Californian company pay a tax rate of between 0.005% and 1% of its European profits between 2003 and 2014 to indicate that a tiny fraction could be taxed in Ireland .
Tim Cook, Apple’s chief executive, said in an open letter that “Apple follows the law and pays all taxes owed” and accused the European Commission to launch an effort to “rewrite history Apple in Europe, overlook the tax laws of Ireland and, in the process, upset the international tax system “.
the European decision represents a major threat to the achievement of a bipartisan tax agreement in Congress US that seems close at hand but has not materialized.
US lawmakers said on Tuesday they expected the ruling accelerate the necessary commitments, includ-ing a single tax for US companies to invest in projects in the country and distribute money to shareholders.
US companies have accumulated foreign earnings beyond the reach of the Internal revenue Service US because of the way the system works in that country. The US-based companies They must pay a fee of 35% on profits earned abroad. However, they can obtain tax exemptions for payments made in other countries and wait until the repatriation of the proceeds to pay the difference in the US.
For example, a US company that makes a profit of US $ 1,000 million in the UK, where the tax rate is 20%, theoretically would pay US $ 200 million in the UK and US $ 150 million in US when repatriating profits.
This system encourages companies to seek the lowest tax rates, accumulate as many profits in those countries and not to repatriate the funds. Pharmaceutical and technology companies in particular have been very adept at transferring intellectual property and accumulate profits outside the US.
Apple, for example, had in June with US $ 215,000 million in cash and other liquid outside the US, compared to US $ 187,000 million investment last September. The company said it would pay a rate of 33% on some of these funds if you choose to repatriate and abroad suggests that paid a rate lower than 10%. Cook said in a recent interview with The Washington Post that Apple will not repatriate the money “until there is a fair rate.”
Until his change of structure 2015, Apple used subsidiaries that deftly moved between US tax laws and Ireland. According to a US Senate investigation in 2013, Ireland considered these firms as US residents as they were managed and controlled from California. US, however, dismissed them as foreign entities were not subject to taxes immediately to the country, being built in Ireland.
“The way the Commission made the decision at its press release was fascinating, “says Lilian Faulhaber, professor of tax law at Georgetown University in Washington. “US Criticizes not require Apple to pay more taxes.”
The US government has warned that EU research could have a direct impact on their tax revenues as the taxes Ireland copper taxes will be deducted from Apple’s US “Basically, if the Commission does not have to do with what Apple pays in taxes,” said Cook in his letter, “but how government collects money.”
The American oil companies have long sought to change laws that force them to pay taxes on their profits in other countries. The EU ruling against Apple could strengthen its reasons. Executives of energy companies, like those in many other sectors, indicate that US policy amounts to double taxation.
Although Ireland could receive US $ 14,500 million, the failure of the EU threatens the pillar of its economic development model: charging lower taxes to attract US multinationals with a presence in Europe and other countries
Apple is not the only American company in the crosshairs of the EU tax issues.. European regulators ordered to Starbucks Corp. in October to pay between 20 million and 30 million euros in taxes forgone due to the way it structured its tax policy in Europe.
Julie Jargon and Bradley Olson They contributed to this article
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