Apple’s Cook lobbies EU antitrust chief over Irish back taxes of up to $8 to 17 Billion
Apple’s Cook lobbies EU antitrust chief over Irish back
taxes
By Christian Oliver in Brussels January 21, 2016 7:47 pm
Apple boss Tim Cook made a surprise visit to Brussels on
Thursday to lobby the EU’s antitrust chief weeks before she is set to rule on a
landmark case that could force the California-based technology company to pay
billions in underpaid taxes to Ireland.
The EU’s probe into Apple’s Irish tax arrangements has
become one of the most politically-charged cases pursued by Brussels since it
took on Microsoft two decades ago. Coupled with its antitrust case against
Google, it has sparked accusations in Washington that European commissioner
Margrethe Vestager is unfairly targeting the US technology sector.
A spokesman for Ms Vestager confirmed she held a “private
meeting” with Mr Cook, but gave no further details. Apple also declined to
comment on what took place at the meeting.
Dublin is known to be angry about what it believes is
unfair treatment of Apple, and its officials worry Ms Vestager’s staff has
changed their legal arguments in the run-up to a decision on whether to order a
repayment of back taxes.
The Danish commissioner has rejected accusations of bias
and argued that she is trying to ensure that EU countries do not give
“sweetheart” tax deals to selected multinationals, which would be unavailable
to competitors, simply to secure investment.
People close to the investigation say a decision will
come after the Irish election, which is expected in late February. Both the
Irish government and Apple have argued that they have done nothing wrong, and
Dublin has vowed to appeal any finding against it.
But Mr Cook’s personal intervention is a sign that Apple
is worried about the direction of Ms Vestager’s inquiry, especially after she
ruled in October that Luxembourg and the Netherlands had provided improper tax
benefits to the Italian carmaker Fiat and the US coffee shop chain Starbucks —
the first such rulings in her expanding corporate tax probe. Those cases are
now being appealed.
Mr Cook is no stranger to taking on senior politicians
critical of the company’s tax practices and emerging with newfound allies.
Two years ago, he appeared before a US Senate inquiry
into corporate America’s use of offshore tax havens and was able to win over
several sceptical senators with a mix of defiance and steeliness that belied
the laid-back Alabama persona he projects during the company’s product
unveilings.
Analysts believe the stakes could be enormous because of
the huge sums of money that Dublin could be forced to recover from Apple.
Bloomberg Intelligence estimates the potential clawback at around $8bn, while
JPMorgan has argued that Apple could have to pay $19bn in a worst-case
scenario.
Lawyers in Brussels say that the European Commission is
unlikely to set such a high recovery figure, but warn that it could still be
the biggest sum ever involved in a commission decision.
Because tax policy is technically a competence of the
member states, the commission has taken a novel and contentious approach to
tackling preferential tax deals by using powerful rules concerning illegal
state aid. In effect, Brussels is arguing that tax rulings are a form of
illegal subsidy that gives companies an unfair advantage over their rivals.
However, people close to Apple and Ireland insist their
case is very different from the previous ones. Apple stresses that it has a
large presence in Ireland, and that its European headquarters are in Cork with
5,500 employees in the country — unlike some other multinationals, which
occasionally have only nameplates to establish residency in tax havens.
Many of the commission’s critics say that the money
earned in Ireland is simply deferred tax that will ultimately be payable to the
US Treasury once Apple repatriates the funds.
They argue that a large share of what the commission
views as taxable income is already booked a deferred US tax in Apple’s
quarterly accounts.
They also accuse the commission of using the state aid
weapon retroactively to trample over tax arrangements that were made in full
accordance with Irish law.
Copyright The Financial Times Limited 2016
Comments
Post a Comment