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Apple faces European probe over alleged tax avoidance

Firm reportedly enjoying tax rates as low as two percent
Wed Jun 11 2014, 12:24
Apple logo on Palo Alto store

THE EUROPEAN COMMISSION (EC) announced on Wednesday that it will look into Apple's tax arrangements to verify that it is complying with European (EU) law.

The EC said that it has launched a formal investigation into Apple's taxes today, along with the arrangements held by Starbucks at Fiat Finance and Tax.

The EC will look at whether Apple's Irish tax arrangements comply with EU law, as Ireland's business tax rate is lower than most EU states at 12.5 percent. However, last year a US Senate committee claimed that Apple had been accused of enjoying tax rates as low as two percent.

The EC added that it will also be looking at the firm's tax arrangements in both The Netherlands and Luxembourg, saying that its preliminary review of calculations have raised "concerns that they could underestimate the taxable profit and thereby grant an advantage to the respective companies by allowing them to pay less tax".

EC VP Joaquín Almunia said, "In the current context of tight public budgets, it is particularly important that large multinationals pay their fair share of taxes.

"Under the EU's state aid rules, national authorities cannot take measures allowing certain companies to pay less tax than they should if the tax rules of the Member State were applied in a fair and non-discriminatory way."

However, Ireland's Department of Finance is confident that it has not breached any European rules, and affirmed that Apple did not receive any selective treatment.

A spokesperson for the department said, "The European Commission has today announced that it will open formal State Aid investigations in a number of Member States.

"This announcement is part of a wider investigation by the European Commission encompassing tax rulings and patent box regimes in a number of member states which has been on-going for some time."

Apple has responded to news of the investigation, saying it has no special tax agreements in place. 

A spokesperson told The INQUIRER, "Apple is proud to have been doing business in Cork, Ireland since 1980. We have grown our workforce to more than 4000 employees, who serve our customers through manufacturing, tech support and other critical functions. These employees play an important part in Apple's success and continued growth in Ireland.  

"Success and growth come from the hard work of our Irish employees not from any special tax deal with the Irish government. We have received no selective treatment from Irish officials. Apple is subject to the same tax laws as scores of other international companies doing business in Ireland." µ

 

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