(Apple’s CEO, Tim Cook)
After finding out that the Ireland wants Apple to cough up €13 billion (£11 billion, $14.5 billion) in back taxes, the tech giant has made it crystal clear that it will have an adverse effect on their future business dealings, including job growth.
Apple feels that Ireland is reneging on its deal which was made back in 1991, where they obtained a ‘comfort letter’ stating the company would pay very low taxes. Since then, Apple has created thousands of jobs. The deal essentially stated that as long as Ireland gave Apple low taxes, it would continue to shift jobs through the country.
A note from a meeting between the government and an Apple tax advisor in 1990 basically said exactly that:
“Apple was now the largest employer in the Cork area with 1,000 direct employees and 500 persons engaged on a subcontract basis. It was stated that the company is at present reviewing its worldwide operations and wishes to establish a profit margin on its Irish operations.”
Apple is now the single largest taxpayer in Ireland, so it has the kind of negotiating strength to get what it wants.
Apple has noted that its tax arrangements were agreed to repeatedly by Ireland’s government. The European Commission itself says the agreements were legal, albeit mistaken. But Margrethe Vestager, the EU’s competition commissioner, made Apple’s Irish tax arrangements sound like a scam:
Apple’s effective European tax rate was 1%, on sales of €16 billion or more per year.
It sunk as low as 0.005% in 2014.
Apple created a head office that did not exist: “This ‘head office’ had no operating capacity to handle and manage the distribution business, or any other substantive business for that matter. … The ‘head office’ did not have any employees or own premises.”
The pact deprived other European countries of billions of euros in unpaid taxes. Source
While we were not there for this business meeting of the minds, our suggestion to Ireland would be to keep its word and continue getting those Apple bucks thrown into their economy. In other words, leave Apple alone and let them keep hiring your citizens.
Photo credit: Apple