Market - - Dec 19,2016
Apple is set to appeal against the European Union’s ruling that bounded the company to pay 13 billion euros ($13.6 billion) as back taxes to Ireland.
Ireland will support the appeal made by Apple, arguing that it should be allowed to decide how much tax it levies on foreign companies. The Dublin government said that the EU is overstepping in the country’s economic administration by misinterpreting its laws and interfering with its national sovereignty.
The US-based tech giant said that it has been singled out as a convenient target. Apple’s European headquarters are located in Ireland, where the standard rates of Corporate Tax stand at 12.5% - much lower than rest of the west European countries.
In August, the EU judged that Ireland has given the rights to Apple to pay substantially lesser as compared to other business set-ups in the country, in effect paying a rate of nothing more than 1%. The EU regulators ruled this controversial tax deal as illegal, and thus imposed the record penalty – a sum that is equal to all of Ireland’s healthcare budget or around 30% of Apple’s 2015 worldwide profit.
In its formal legal statement, the Irish government has said that the whole point of low taxes is to attract foreign investment, adding that it is perfectly legal for any country to levy lower or even no tax on profits of a company. It accuses the EU competition authorities to be unfair, exceeding their competence and authority and seeking to breach Ireland’s sovereignty in its own national affairs.
The EU judgment incurs potential tax infringements dating from 2003 to 2014, and not all the way back to Apple’s original 1991 tax deal with Ireland. Corporate tax specialists, however, estimate that if the EU order is imposed, it would cost around 19 billion euros due to compounding interest from delayed payment.