Apple owes Ireland billions in taxes - EU

  • 30/08/2016
(Getty / file)
(Getty / file)

Apple has been ordered to pay up to €13 billion (NZ$20 billion) in back taxes to Ireland by the European Commission.

The Commission has been examining Apple's tax deals with Ireland for three years and has ruled them as illegal state aid.

The deals allowed Apple to pay very little tax on profits made throughout Europe.

It's understood Apple plans to appeal the decision.

The bill is far more than the €30 million each the European Commission previously ordered Dutch authorities to recover from US coffee chain Starbucks and Luxembourg from Fiat Chrysler for their tax deals.

Both companies and countries have appealed those decisions.

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 iPhone maker amounted to state aid and might have broken EU laws.

The Commission said the rulings were "reverse engineered" to ensure that 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 5500 workers, or about a quarter of its European-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 20 years, drawing investors from major multinational companies whose staff account for almost one in 10 workers in Ireland.

Some opposition Irish MPs 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 the reassurances it had been given by the government to date.

Prime Minister John Key says officials will be looking at the decision, and he was taking a wait-and-see approach.

"I think [multi-national companies] are paying their fair share of tax if you look at the current tax rules and the way they intersect with different tax rules around the rest of the world. I don't have any advice that they're doing anything illegal, that's for sure.

"But the question is whether the mismatch of all of those rules is something these multi-nationals can arbitrage and if they are, then we'd say on balance that's not fair even if it's legal."

The Green Party says the ruling could mean Apple likely owes New Zealand back taxes too, and says the country "isn't moving quickly enough to shut down this tax rort".

Newshub. / Reuters