Tax ruling 'political crap' - Apple


Apple's chief executive says a European Commission ruling that the company should pay billions in back taxes is "political crap".

Tim Cook has spoken to Irish media about the ruling that the company should pay €13 billion (NZ$20 billion), plus interest, to Ireland.

The interest payments could add another NZ$7 billion to the bill, based on Ireland's penalty rates for late tax payments.

Mr Cook rejected a suggestion that Apple paid only €500 for every €1 million in profit it made in 2014 (a tax rate of 0.005 percent).

He said that was "total political crap" and that Apple paid the full Irish corporate tax rate of 12.5 percent.

He told the Irish Independent newspaper: "They just picked a number from I don't know where. In the year that the Commission says we paid that tax figure, we actually paid $400 million. We believe that makes us the highest taxpayer in Ireland that year."

This has been disputed by sources within the European Commission, who say €400 million was much higher than Apple's total Irish corporate tax liability in 2014.

The Apple chief executive also said that Apple's global tax rate was 26.1 percent.

This appears to be based on a figure that includes the US corporate tax rate of 35 percent. But Apple is yet to pay taxes on more than US$200 billion in cash reserves that it is holding internationally. The US tax payments are not triggered until the money is brought into the United States.

Tim Cook said the company would bring some or all of the money home next year, triggering the US tax payments.

He said that Ireland was being singled out and he hoped that the Irish government would appeal the ruling.

He also suggested that the ruling had been motivated by a growing anti-US feeling within the European Commission and by a desire by Europe to harmonise Europe's tax laws.

Mr Cook told the Irish Independent, "I think that Apple was targeted here. And I think that [anti-US sentiment] is one reason why we could have been targeted.

"People in leadership positions in several countries tell me that this is the agenda. I don't know where that comes from. But what I feel strongly about is that this decision was politically based, of that I'm very confident. There is no reason for it in fact or in law."

The timing of the dispute is not good for Apple. Next week it will stage a product launch, which is expected to include an iPhone 7, a new Apple Watch and revamped iPads and Macbooks.

What will worry Apple is the potential public reaction to the tax dispute.

Will people accept Mr Cook's word that Apple has paid its fair share, or will they side with the European Commission?

Even if people back the EU, will it make any difference to them when they decide whether to buy a new iPhone?


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