Apple currently has a really amazing deal when it comes to paying taxes in Ireland. Until about a year ago when the European Commission ruled that Apple’s deal with Ireland was illegal and that they actually owed about $15 billion in back taxes. Ireland has been relatively slow to collect the cash, which led the Commission to refer the Irish government to the European Court of Justice in October due to non-compliance with this ruling. Huh? Who doesn’t want to collect taxes? Especially when it’s that kind of dollar figure. It’s been reported that they will finally start collecting the billions of taxes that Apple owes them. Again, I ask the question – why haven’t they started collecting these taxes?
What makes this story really interesting (and odd) is that not only is Apple fighting against this ruling, but so is Ireland. I repeat what I said earlier – huh? Ireland is saying that the EU has overstepped its authority and that it misinterpreted some of the country’s laws. Apple, rightfully so, is saying that the amount they’re being told to repay has been miscalculated. Apple’s argument makes sense to me, but I can’t for the life of me understand why Ireland is fighting this ruling. Sure, you don’t want to enforce a law incorrectly, but at the same time wouldn’t the EU understand these laws to some degree? I mean, they do have lawyers, don’t they?
Apple is expected to start paying Ireland during the first quarter of 2018. While Apple is required to pay taxes, they have been essentially splitting the tax rate between Ireland and the United States. According to the Commission, Apple hasn’t been paying Ireland taxes in accordance with the law. So does that mean they’ve been paying taxes in the United States? According to a statement released by Apple in November, they pay every dollar they owe in every country around the world. This statement was made in response to a report by the International Consortium of Investigative Journalists. They apparently reported some inaccuracies, which upset Apple, so they want to set the record straight:
- The changes Apple made to its corporate structure in 2015 were specially designed to preserve its tax payments to the United States, not to reduce its taxes anywhere else. No operations or investments were moved from Ireland.
- Far from being “untouched by the United States,” Apple pays billions of dollars in taxes to the US at the statutory 35 percent rate on investment income from its overseas cash.
- Apple’s effective tax rate on foreign earnings is 21 percent — a figure easily calculated from public filings. This rate has been consistent for many years.
They go on to say:
“The debate over Apple’s taxes is not about how much we owe but where we owe it. As the largest taxpayer in the world we’ve paid over $35 billion in corporate income taxes over the past three years, plus billions of dollars more in property tax, payroll tax, sales tax and VAT. We believe every company has a responsibility to pay the taxes they owe and we’re proud of the economic contributions we make to the countries and communities where we do business.”
Is it Apple’s fault that they weren’t paying the proper tax rates to Ireland? Or is it someone else’s fault for not informing Apple how much they had to pay? The statement also indicates that Ireland changed its tax laws in 2015, and since then their payments to Ireland increased significantly, and they have paid $1.5 billion in taxes there. Further, they indicate that based on all corporate income taxes, they send 7% to Ireland. The full statement is incredibly long, but it does sound like this wasn’t their error. Who made the mistake that resulted in Apple owing such a large amount of back taxes is unknown. But they will start paying those taxes back soon, which will definitely help the Irish economy.