US slams EU order for Apple to pay back €13bn over ‘illegal’ Irish tax benefits

The US Treasury department on Tuesday heavily criticised an EU ruling ordering Apple to pay record back taxes, saying the decision threatened the bilateral “spirit of economic partnership”.

“The commission’s actions could threaten to undermine foreign investment, the business climate in Europe, and the important spirit of economic partnership between the US and the EU,” a Treasury department spokesperson said.

“We will continue to monitor these cases as they progress, and we will continue to work with the Commission toward our shared objective of preventing the erosion of our corporate tax bases.”

The European Union says Ireland has given illegal tax benefits worth up to €13 billion (Dh53.33bn) to Apple and must now recover the unpaid back taxes from the US technology company, plus interest.

The EU competition commission Margrethe Vestager said Tuesday: “Member states cannot give tax benefits to selected companies–this is illegal under EU state aid rules.”

She said a three-year investigation found Ireland granted such lavish tax breaks to Apple over many years that the multinational’s effective corporate tax rate on its European profits dropped from 1 per cent in 2003 to a mere 0.0005 per cent in 2014.

The commission said Ireland must now recover the unpaid taxes in Ireland from Apple for the years 2003 to 2014 of up to €13bn, plus interest.

Ireland disagrees profoundly with the commission’s ruling, its finance minister Michael Noonan said afterwards, ahead of seeking cabinet approval to appeal.

Ireland’s finance ministry said its position remained that the full amount of tax was paid and no state aid was provided. Ireland did not give favourable tax treatment to Apple and does not do deals with taxpayers, it added.

It also said the disputed tax opinions in the Apple case no longer applied and that the decision had no effect on Ireland’s 12.5 per cent corporate tax rate or on any other company with operations in the country.

“I disagree profoundly with the commission,” Mr Noonan said. “The decision leaves me with no choice but to seek cabinet approval to appeal. This is necessary to defend the integrity of our tax system; to provide tax certainty to business; and to challenge the encroachment of EU state aid rules into the sovereign member state competence of taxation.”

He added that the decision was a bizarre exercise in politics.

“As far as I am concerned there is no economic basis for this decision,” Mr Noonan told the state broadcaster RTE. “It’s bizarre and its an exercise in politics by the competition commission.”

“They don’t have responsibility for taxes and they are opening a back door through state aid to influence tax policy in European countries when the European treaties say tax policy is a matter for sovereign governments,” he added.

Apple said it would appeal against the ruling.

“Apple follows the law and pays all of the taxes we owe wherever we operate. We will appeal and we are confident the decision will be overturned,” the company said after the commission’s decision.

“The commission’s case is not about how much Apple pays in taxes, it’s about which government collects the money. It will have a profound and harmful effect on investment and job creation in Europe,” Apple said.

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