EU Slaps a $14.5 Billion Tax Penalty to Apple; Apple and Ireland Will Appeal
EU antitrust regulators ordered Apple on Tuesday to pay up an estimated amount of $14.5 billion in back taxes including interest after judging that the tech giant used a gray area of Irish law to channel and park its earnings in Ireland according to a report by Reuters.
The gargantuan penalty is 40 times larger than the previous penalty demanded by the European Commission to a company. The EU stated that the penalty could be reduced if other European countries aside from Ireland would seek more back taxes from the Iphone maker.
Apple and Ireland responded saying that they will both appeal the judgement.
The Commission reported that Apple paid tax rates on European sales of its products and services of just 1 percent in 2003 and 0.005 percent in 2014.
EU Competition Commission Margrethe Vestager said that "Ireland granted illegal tax benefits to Apple, which enabled it to pay substantially less tax than other businesses over many years."
The EU's obsessive and discriminate crackdown on mostly U.S. corporations has earned the ire of Washington lambasting the EU of protectionism.
Reuters reported that online retail behemoth Amazon and hamburger giant McDonald's are under investigation over taxes in Luxembourg, while coffee chain colossus Starbucks has been demanded to pay $33 million in tax penalties.
Reuters further reported that in 2014 the European Commission accused Ireland of evading international tax rules by allowing Apple to shelter its profits worth tens of billions of dollars from tax collectors so that the tech giant will create jobs in the country. Apple and Ireland vehemently rejected the accusation.
Irish Finance Minister Michael Noonan said, "I disagree profoundly with 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 EU state aid rules into the sovereign member state competence of taxation."
"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," Noonan further said
Apple immediately released a statement saying it was confident to win an appeal.