18 January 2016 – Apple is bracing for the mother of all tax bills as leaks from Brussels suggest it could ask the fruity cargo cult to pay $8 billion.
The European Commission has been investigating Apple’s tax policies, and Matt Larson of Bloomberg Intelligence said that it could demand Apple pay back $8 billion. Apple of course will drag things out with a long legal battle because it insists that as the rules stand its method of not paying tax in the country where it makes its profits is perfectly legal.
We covered these tax dodges in a earlier post (click here).
Since 2014, the European Commission thinks that Apple’s corporate arrangement in Ireland allows it to calculate profits using more favorable accounting methods. Apple calculates its tax bill using low operating costs, a move that dramatically decreases what the company pays to the Irish government. While Apple generates about 55 percent of its revenue outside the U.S., its foreign tax rate is about 1.8 percent.
Larson said that if the Commission decides to enforce a tougher accounting standard, Apple may owe taxes at a 12.5 percent rate, on $64.1 billion in profit generated from 2004 to 2012.
Apple has called in its tame politicians from the “Corporate Oligarchy of the United States” to demand that it be allowed to avoid paying taxes.
In a letter to US Treasury Secretary Jack Lew, bipartisan members of the Senate Finance Committee asked the administration to make sure that European regulators won’t impose retroactive penalties like those that would hit Apple. The senators said the companies may be facing “discriminatory taxation” and that the U.S. government should consider retaliatory measures if European tax authorities follow through with their actions against Apple and others.
Their argument is that while it is probably ok to tax Apple now, it is not a good idea to go back in time to sting them for looking for loopholes in the past.
Apple Chief Executive Officer Tim Cook has denied that the company uses tricks to avoid paying taxes. In a recent interview on CBS Corp.’s “60 Minutes,” he called the criticism the company has faced from U.S. lawmakers “political crap.” He said the tax system is outdated and needs to be updated for a digital economy.
