Apple appeals $14 billion EU tax ruling

Apple has submitted its appeal of the EU’s $14 billion tax judgment, claiming the ruling ignores advice from tax experts and singles out Apple unfairly because of its success, Reuters reports. The European Commission said Apple paid substantially less than other companies in Ireland due to a preferential deal, ending up with a corporate tax rate of no more than 1 percent, while other companies pay around 12.5 percent. But Apple General Counsel Bruce Sewell said the commission intentionally used a method to calculate the tax rate that would maximize the penalty and gain more media attention. “Apple is not an outlier in any sense that matters to the law,” Sewell said. “Apple is a convenient target because it generates lots of headlines.”
After a three-year investigation, the commission ruled that Ireland had dodged international tax rules, letting Apple use its country as a tax shelter for profits from other European nations in exchange for maintaining jobs within the country. The commission’s report, issued today, claims Apple officials met with the Irish revenue service in 1990 to discuss “an appropriate level of profits Apple’s Irish unit would pay tax on,” with the company’s representative suggesting a cap between $30-$40 million. “[Apple’s tax adviser] confessed there was no scientific basis for the figure. However the figure was of such magnitude that he hoped it would be seen to be a bona-fide proposal,” the report claims. Apple has achieved a 3.8 percent tax rate on overseas profits over the last 10 years by telling U.S. officials that income is earned by its Irish units, while telling Ireland that the profits weren’t earned in Ireland. For its part, Ireland has accused the EU of questioning its own sovereignty over tax affairs and exceeding its powers. Apple is arguing that the commission’s investigation was flawed because it ignored Ireland’s entire system of tax laws and didn’t cite testimony from tax experts offered by Irish authorities. “Now the Irish have put in an expert opinion from an incredibly well-respected Irish tax lawyer. The Commission not only didn’t attack that — didn’t argue with it, as far as we know — they probably didn’t even read it. Because there is no reference (in the EU decision) whatsoever,” Sewell said.