Apple faces EU tax investigation
Source: totaltele.com View: 291 Date: 2014-06-12

The European Commission on Wednesday announced that it will carry out an in-depth investigation into Apple’s tax affairs in Ireland.

The Commission seeks to ascertain whether the corporate income tax paid by the U.S. consumer electronics giant complies with EU regulations on state aid. Apple is one of three companies under investigation; the EU will also probe Starbucks’ activities in the Netherlands and those of Fiat Finance and Trade in Luxembourg.

"In the current context of tight public budgets, it is particularly important that large multinationals pay their fair share of taxes," competition commissioner Joaquín Almunia said in a statement.

"Under the EU’s state aid rules, national authorities cannot take measures allowing certain companies to pay less tax than they should if the tax rules of the member state were applied in a fair and non-discriminatory way," he added.

Apple is effectively exploiting a loophole in Irish law that allows it to establish subsidiaries in Ireland that have no formal tax residence, a move that has enabled it to significantly reduce its tax bill. Both Apple and the Irish government have in the past dismissed the suggestion that they have brokered a special tax deal.

The European Commission asserts that a number of multinational companies are using tax planning strategies to reduce their tax bills " by taking advantage of the technicalities of tax systems."

These technicalities include rules on transfer pricing, or the value of deals made between subsidiaries of the same company that can affect the calculation of a company’s taxable profit.

In a nutshell, if the Commission finds that Apple – and the other two firms under investigation – received any special treatment that could be classed as state aid and would not be permitted.

 

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