EU says Apple gets illegal tax benefits in Ireland
Published 10:12 am Wednesday, October 1, 2014
BRUSSELS — Apple risks having to repay Ireland tax rebates worth billions of dollars after the European Union’s competition watchdog said Tuesday the company appears to be benefiting from illegal tax deals there.
In a preliminary report into the company’s overseas tax practices, the 28-nation bloc’s executive Commission said the low tax treatment Ireland is granting Apple counts as state aid and could be illegal under EU law.
If the finding is confirmed, Apple Inc. could face a huge repayment bill because it funnels the bulk of its international sales through subsidiaries in Ireland.
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To keep market competition fair, the EU forbids governments from helping individual companies. The EU first announced the tax probe in June, also targeting coffee chain Starbucks and others as part of a crackdown on multinationals exploiting tax loopholes.
The EU Commission is now requesting further documents from Ireland before making a legally binding decision on whether the rebate granted to Apple is illegal and must be recouped, wholly or partially.
The EU probe focuses on exaggerated transfer pricing, where one part of a company charges another part an inflated price for goods or services to shift profits to low-tax locations.
If Apple had to repay some taxes, the money would come as a windfall to Irish state coffers. However, fearful of losing its reputation as a business-friendly country with low corporate taxes, the Irish government is adamant that no EU rules have been breached.