Apple set to pay Ireland billions in back tax
April 25, 2018
Apple and the Irish finance minister, Paschal Donohoe, were set to sign the formal legal agreement that will allow Ireland to collect some €13 billion ($16 billion) in back taxes from the tech giant following orders from the European Commission, the Irish Finance Ministry announced Tuesday.
Though the signing means that Apple can start making a decade's worth of back payments to the EU nation, both parties continue to dispute the fact that Ireland gave Apple preferential tax treatment amounting to illegal state aid.
Details of the deal
- Donohoe said the escrow arrangement for "the recovery of alleged state aid" would be signed sometime on Tuesday.
- Once the deal is signed, Apple can begin payments into an escrow fund set up for the explicit collection of Apple's back taxes.
- Apple is expected to pay in multiple installments, with all money transferred by the end of this year's third business quarter.
Read more: EU executive unveils plan for digital tax on tech giants
An unwanted 'milestone'
Donohoe said in a statement that the signing of the deal was "a significant milestone" and described the framework as "the largest recovery fund of its kind ever to be established."
However, he added that "the [Irish] Government fundamentally disagrees with the ruling of the Commission" in 2016 that ordered the country to collect around €13 billion plus interest from Apple.
A EU Commission spokesperson said that it hoped the back tax would be recovered as quickly as possible.
Read more: EU orders Amazon to pay Luxembourg 250 million euros in back taxes
Why does Apple have to pay? In August 2016 the European Commission ruled that the tech company had benefited from unfair tax advantages in Ireland from 2004 through 2014. The EU body said that Apple paid an effective corporate tax rate equal to just €50 for every million of its 2014 profits.
What is the disagreement about? Apple and Ireland both say that the company's tax treatment followed both Irish and EU law. Furthermore, the EU has taken Ireland to court over delays in the payment of back taxes, but the Irish government has said it has acted as fast as it could.
Why Ireland? The EU nation has courted major multinational companies such as Facebook, Google and Apple — all of which have their European headquarters in Dublin — by providing access to the EU single market with a low corporate tax rate.
Upcoming appeal: Donohoe told journalists that an appeal by Ireland and the tech company against the payments would likely begin this fall.
Read more: Apple tax raises existential questions for Ireland
cmb/aw (Reuters, AFP)