Apple Inc. (AAPL) Prepares To Fight Imminent Order For Back Taxes


Apple Inc. is working to defend an imminent order to pay back years of unpaid taxes after the European Commission rule this week that Ireland gave illegal state aid to the tech giant. It is expected that the European Commission will make the declaration this week that Apple was given an unfair advantage in the deals between it and the Irish state that stretch back 25 years, notes a report from Telegraph.

Apple, Ireland to appeal against the ruling

Once the decision comes from European Commission, both Apple and the Irish government are expected to signal soon that they will appeal against it. Recently, Apple CEO – Tim Cook – said that in case the firm feels it has not had ‘a fair healing,’ then it will fight the ruling. Earlier this month, Cook said, “People really aren’t arguing that Apple should pay more taxes. They’re arguing about who they should be paid to.”

Apple Inc. (AAPL)

On the other hand, the Irish finance minister, Michael Noonan has said the government will appeal any negative finding, the report notes. Over the weekend, the Ministers received a memo from Government Building in which they stressed that Ireland would contest the expected findings, reported Irish Times.

Apple Inc. and Ireland entered into two agreements in 1991 and 2007, allowing the US firm to route its international sales through the country to a subsidiary, which is not resident in Ireland for tax purposes. Both these agreements are under commission’s investigation.

It is estimated that Apple pays 2pc or less on profits, due to its arrangements in Ireland that have helped it build up an offshore cash pile of $215bn, the report notes. In its argument, Apple says that instead of paying corporation taxes abroad, it should do so when it chooses to repatriate the funds to the US as it develops its products there only.

Amount recovered will be used to settle debts

The Apple tax bill won’t be transferred to the State immediately most likely. Instead, it may be held in an escrow account pending appeals of the EU’s decision by Apple Inc. and the Irish Government.

Irish Times, citing sources with the knowledge of the issue, said that in case the appeals are lost, and the cash reverts to the Irish state, it won’t be utilized for budget spending or investment. It will get the treatment of windfall gain, and the Government will be able to use it only for paying down the national debt, says Irish Times.

Anytime this week, the European Commission is expected to make public a ruling that Apple’s tax arrangements in Ireland constituted illegal state aid. EU’s decision is eagerly awaited by the Officials and Ministers in Dublin. The Revenue Commissioners will be ordered by the commission to pursue Apple for back taxes, says Irish Times.

Two years ago, the European Commission said it had taken the preliminary view that Apple got an unfair advantage from its arrangements in Ireland.

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Aman is MBA (Finance) with an experience on both marketing and Finance side. He has work as a Risk Analyst for AIR Worldwide, and is currently leading VeRa FinServ, a Financial Research firm. Favorite pastimes include watching science fiction movies, playing PC games and cricket.


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