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EU rules Apple must pay up to 13B euros in back taxes

Canadian Press THE CANADIAN PRESS

BRUSSELS — The European Union says Ireland has given illegal tax benefits worth up to 13 billion euros ($14.5 billion) to Apple Inc. and must now recover the unpaid back taxes from the U.S. technology company, plus interest.

EU Competition Commissioner Margrethe Vestager said Tuesday: “Member states cannot give tax benefits to selected companies - this is illegal under EU state aid rules.''

She said a three-year investigation found Ireland granted such lavish tax breaks to Apple over many years that the multinational's effective corporate tax rate on its European profits dropped from 1 per cent in 2003 to a mere 0.0005 per cent in 2014.

The Commission said “Ireland must now recover the unpaid taxes in Ireland from Apple for the years 2003 to 2014 of up to 13 billion euros ($14.5 billion), plus interest.''

The Irish government denied granting favourable fiscal treatment to the maker of the iPhone and other consumer electronics products, computer software and online services. “Ireland's position remains that the full amount of tax was paid in this case and no state aid was provided,'' the Irish statement said. “Ireland does not do deals with taxpayers.''

As Toronto tax litigation lawyer David J. Rotfleisch tells AdvocateDaily.com, at first glance, this is a dispute between the EU and Ireland, although Apple is the subject. 

“Although Ireland stands to receive at least 13 billion euros, the ruling is being disputed by Ireland. The EU said that the tax agreement between Ireland and Apple amounts to state aid to Apple, a charge denied by Ireland," says Rotfleisch, founding tax lawyer at Rotfleisch & Samulovitch Professional Corporation.

“The Irish government has long had a policy of low corporate tax rates to attract large international companies. It argues that this ruling jeopardizes this policy and will appeal it. It's interesting in light of the Brexit vote to see that the EU continues to challenge basic policies of its member states,” he adds.

The Irish finance minister, Michael Noonan, said he would seek approval from the Irish Cabinet to appeal the EU Commission's ruling to European courts.

“It is important that we send a strong message that Ireland remains an attractive and stable location of choice for long-term substantive investment,'' Noonan said. “Apple has been in Ireland since the 1980s and employs thousands of people in Cork.''

– With files from AdvocateDaily.com

© 2016 The Canadian Press

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