Apple for the day

Time has a Reuters article by Foo Yun Chee about bad news for Apple:

European Commission antitrust regulators ordered Apple to pay up to thirteen billion euros (nearly fifteen billion dollars) in taxes (plus interest) to the Irish government after ruling that a special scheme to route profits through Ireland was illegal state aid.
The massive sum, forty times bigger than the previous known demand by the European Commission to a company in such a case, could be reduced, the European Commission executive said in a statement, if other countries sought more tax themselves from the American tech giant.
Apple which, with Ireland, said it will appeal the decision, paid tax rates on European profits on sales of its iPhone and other devices and services of between just 0.005 percent in 2014 and one percent in 2003, the Commission said.
“Ireland granted illegal tax benefits to Apple, which enabled it to pay substantially less tax than other businesses over many years,” said Competition Commission Margrethe Vestager (photo), whose crackdown on mainly American multinationals has angered Washington which accuses Brussels of protectionism.
Online retailer Amazon.com and hamburger group McDonald’s face probes over taxes in Luxembourg, while coffee chain Starbucks has been ordered to pay up to thirty million euros (over thirty-five million dollars) to the Dutch state.
A bill of three hundred million euros this year for Swedish engineer Atlas Copco AB to pay Belgian tax is the current known record. Other companies ordered to pay back taxes in Belgium, many of them European, have not disclosed figures.
For Apple, whose earnings of eighteen billion dollars last year were the biggest ever reported by a corporation, finding several billion dollars should not be an insurmountable problem. The thirteen billion euros represents about six percent of the firm’s cash.
As of June of 2016, Apple reported it had cash, cash equivalents, and marketable securities of over two hundred billion dollars, of which over ninety percent is held in foreign subsidiaries. It paid nearly three billion dollars in taxes during its latest quarter at an effective tax rate of 25.5 percent, leaving it with net income of nearly eight billion dollars, according to company filings.
The European Commission in 2014 accused Ireland of dodging international tax rules by letting Apple shelter profits worth tens of billions of dollars from tax collectors in return for maintaining jobs. Apple and Ireland rejected the accusation.
“I disagree profoundly with the Commission,” Irish Finance Minister Michael Noonan said in a statement. “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 European Union state aid rules into the sovereign member state competence of taxation.”
Ireland also said the disputed tax system used in the Apple case no longer applied, and that the decision had no effect on Ireland’s twelve and a half percent corporate tax rate or on any other company with operations in the country.
Apple said in a statement it was confident of winning an appeal. “The European Commission has launched an effort to rewrite Apple’s history in Europe, ignore Ireland’s tax laws, and upend the international tax system in the process. 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.”
When it opened the Apple investigation in 2014, the Commission told the Irish government that tax rulings it agreed in 1991 and 2007 with the company amounted to state aid and might have broken EU laws.
The Commission said the rulings were “reverse engineered” to ensure Apple had a minimal Irish bill and that minutes of meetings between Apple representatives and Irish tax officials showed the company’s tax treatment had been “motivated by employment considerations.”
Apple employs over five thousand people, or about a quarter of its Europe-based staff, in the Irish city of Cork, where it is the largest private sector employer. It has said it paid Ireland’s 12.5 percent rate on all the income that it generates in the country.
Ireland’s low corporate tax rate has been a cornerstone of economic policy for twenty years, drawing investors from multinational companies whose staff account for almost one in ten workers in Ireland.
Some opposition Irish lawmakers have urged Dublin to collect whatever tax the Commission orders it to. But the main opposition party Fianna Fail, whose support the minority administration relies on to pass laws, said it would support an appeal based on reassurances it had been given by the government.
The U.S. Treasury Department published a white paper last week that said the EU executive’s tax investigations departed from international taxation norms and would have an outsized impact on American companies. The Commission said it treated all companies equally.

Rico says that, fortunately, they've got the money to pay it...