CUPERTINO, Calif. – Today, Apple agreed to start paying 13 billion euros or about 15.4 billion dollars to Ireland in line with the European Union ruling.
It is for the back taxes that were ordered from the company to pay Ireland last year. Ireland was ordered by the European Union to collect a total amount of 13 billion euros from Apple including the interest.
It was after ruling out that the technology giant has received some illegal tax benefits from the Irish government. This decision was in line with the closing of one stage of the ongoing investigation on the tax deals that were done between US multinationals all over Europe.
According to The Wall Street Journal, the decision was also a follow-up of the crackdown on profit offshoring and tax shelter policies.
The ruling was issued August of 2016. However, Ireland refused to collect the money from Apple. Most countries would be ecstatic to receive, much less ordered to collect about 15 billion dollars in tax revenues, but Ireland wasn’t having any of it. Ireland has become one of the known European hubs for several American technology companies primarily because of its somewhat accommodating tax policies.
Ireland is strategic about their significantly low tax rates. It is a move to increase the domestic investment the country can get from various foreign corporations. However, this practice has led to the country being used as a tax shelter by companies like Apple. They pay tax rates as little as 0.005 percent for all of their European profits.
It is the case since 2003 up to 2014 where there are now shell companies and subsidiaries that are solely built to maintain and collect offshore revenues.
Despite the ruling by the European Union Commissioner, Tim Cook, the CEO of Apple, has long since challenged the characterization of these tax schemes and has even called out the ruling as a total political crap.
During the preparation to change the tax policy of Ireland, reports showed that Apple recruited Appleby, a Bermuda-based law firm, for advice regarding the next best move on the company’s offshore tax residency. In 2014, the company moved two of its subsidiaries from Ireland to Jersey as what most call it to be a shift in the strategy of taking advantages of the offshore tax rules. It includes the Apple Sales International or ASI and the Apple Operations International AOI which are now managed in Jersey since 2015.
On the other hand, the inaction in the side of Ireland forced the European Union to refer the government to the European Court of Justice. It is the highest court of the governing body which EU thinks would compel the country to collect the necessary back taxes.
Paschal Donohoe, the Irish finance minister, said yesterday that the country is now expecting to receive money from Apple starting the first quarter of next year.
However, while Apple seemed to be willing to pay the amount, both the tech company and the Irish government are still appealing the European Union ruling.
The company executives even expect to recoup their money if all goes well. In their statement, Apple said that they have a dedicated team currently working with Ireland in line with what the European Commission has mandated.