Apple and Irish government collared over tax deal
Discussion
Welshbeef said:
Isn't £11billion easily more than an entire years worth of public sector spending?
What EU debts do Ireland have remaining as this slug of cash could clear significant amounts of their debt in one unexpected go.
A little bit of recent Irish history will helt to understand why the Irish government will fight this tooth and nail, and the Irish people will support them 100%.What EU debts do Ireland have remaining as this slug of cash could clear significant amounts of their debt in one unexpected go.
In 1976, Ireland was very poor. There were bugger all jobs. The biggest industry was farming, but the average farm size was 4 acres. There was an NHS, but it was fairly limited.
In 1971 DEC, who were one of the biggest computer manufacturers, opened a factory in Galway. Galway was the main urban centre in Ireland's poorest province.
By the mid 80's, Galway had become a bustling cosmopolitan centre with some of the best restaurants in the country. What was realy impressive was that there was a 10 mile stretch of road with 5 and 6 bedroom houses on four acre plots north west of the city.
I think that this is the road in question:-
https://www.google.co.uk/maps/@53.3223997,-9.16237...
Bear in mind, that a decade earlier most of the homes on this road had only two rooms (NOT two beedrooms). The toilet was in a freezing shed.
The Irish know how important it is to attract international investment. They have seen what it has done. They know how their parents lived. They feel this in their bones.
My feeling is that Ireland would sooner leave the EU than force Apple to pay this fine.
don4l said:
My feeling is that Ireland would sooner leave the EU than force Apple to pay this fine.
I dont understand how Ireland can force Apple to pay the fine. What Irish law has Apple broken?Edited to add; I could understand the EU fining the Irish government for breaking EU competition law.
Edited by s2art on Wednesday 31st August 20:25
Leithen said:
It will be interesting so see what burden of proof is required to either challenge or support the State Aid interpretation.
Have other corporates been denied it? Is it enough that other corporates haven't requested a similar ruling?
The EU has already succesfully challenged Belgium on a rule which could only have applied to multinational groups, and not domestic only groups. In that case, clearly domestic companies could never have claimed the relief, so they don't have to prove that other groups did not try to claim the relief. Have other corporates been denied it? Is it enough that other corporates haven't requested a similar ruling?
In Apple's case, they got a ruling. Comparables will be other rulings and whether domestic companies could have claimed the same benefits. And I don't think they could. I think Apple used to use a "double Irish" structure, which was most relevant to US headed groups.
s2art said:
don4l said:
My feeling is that Ireland would sooner leave the EU than force Apple to pay this fine.
I dont understand how Ireland can force Apple to pay the fine. What Irish law has Apple broken?jsf said:
s2art said:
don4l said:
My feeling is that Ireland would sooner leave the EU than force Apple to pay this fine.
I dont understand how Ireland can force Apple to pay the fine. What Irish law has Apple broken?Alpinestars said:
s2art said:
I dont understand how Ireland can force Apple to pay the fine. What Irish law has Apple broken?
It's broken EU law by giving illegal state aid. Dr Jekyll said:
Two issues.
First of all if 'shifting' profit from other territories into Ireland is valid, why isn't shifting it out again?
Secondly, the Irish government is adamant that there was no 'agreement' with Apple. Merely an official confirmation as to how the existing Irish tax rules applied to Apple's situation.
Shifting profits into Ireland - who's going to be bothered about that? The jurisdiction from which it is shifted. Not Ireland. So that's for the territory in which the sale is made to challenge. That's not the subject of the case. First of all if 'shifting' profit from other territories into Ireland is valid, why isn't shifting it out again?
Secondly, the Irish government is adamant that there was no 'agreement' with Apple. Merely an official confirmation as to how the existing Irish tax rules applied to Apple's situation.
I'll eat my hat if there is not an agreement on allocation of profits with the Irish tax authorities. My understanding is that it got tax rulings in 1991 and 2007.
Alpinestars said:
turbobloke said:
Why should Ireland not have the freedom to treat companies however it likes?
Because it's in the EU and subject to EU law, including State Aid law. It's illegal to give State Aid in the EU. Dr Jekyll said:
But if Ireland has broken the law that's an argument for fining Ireland. It isn't an argument for the EU redrawing Irish law against the wishes of the Irish government. This is a blatant case of the EU acting as a superstate rather than a customs union.
Who has benefited and who filed the advance pricing agreements? Apple. Everyone who operates in the EU knows they are subject to State Aid rules. What they overlooked was that selective tax rulings would fall into the definition of State Aid.
Alpinestars said:
Shifting profits into Ireland - who's going to be bothered about that? The jurisdiction from which it is shifted. Not Ireland. So that's for the territory in which the sale is made to challenge. That's not the subject of the case.
It's exactly the subject of the case. The EU are demanding that Apple pays tax as if those profits were made in Ireland, which they clearly weren't.Dr Jekyll said:
It's exactly the subject of the case. The EU are demanding that Apple pays tax as if those profits were made in Ireland, which they clearly weren't.
No it's not. Ireland, or any other territory does not challenge too much profit being allocated to it. That's not how transfer pricing works, for obvious reasons. The point here is that given the profit has been booked in Ireland, why did the Irish tax authorities allow only a small percentage to be subject to Irish tax. If the sales territories successfully challenge that some profits should have been taxed in their territory, this will reduce the EU State Aid tax liability in Ireland.
Hosenbugler said:
The democratically elected Irish Government has tax raising powers over its jurisdiction,
Correct, but in this instance the Irish government are setting a corporation tax which also covers all EU profits made by Apple. This probably amounts to a few quid (or Euros). So obviously there is a 'slight' motivation for Ireland to attract Apple with the lowest taxation so ALL profit made in the EU comes back into the Irish coffers. I imagine other EU countries are slightly peeved that this 'illegal' non level playing field was allowed. Any other company based in Ireland pays 11% (cannot remember exact figure.) - hence the £1BN tax bill. If the Irish want to play in the EU, there needs to be a level playing field. Otherwise, the Irish could just collect corporation tax on Irish sales/ profit.Hosenbugler said:
it made an agreement concerning that taxation with a 3rd party. There has been NO tax evasion . As they both make perfectly clear. Not only that, the EU make it clear that Apple have broken NO laws . Yet they still want to steal £11 billion from them.
I agree that there appears to be no evasion as they have paid the agreed rate, but they have colluded with (bribed??) the Irish government to reduce their tax liability in the whole of the EU. It was obviously mutually beneficial for both parties. If the Irish were only collecting corporation tax for profits made on Irish sales I don't personally see an issue, however collecting corporation tax on the entire EU profits does feel wrong to me... PS I don't claim to understand the legalities and laws broken for this 'deal'.
Hosenbugler said:
The agreement was made between Apple and the Irish govt years ago, the EU did f
k all about it , untill of course their pet Euro project hit the rocks of their incompetence . This is nothing other than a money grab for "any excuse" very, very Soviet Union.
The length of time is irrelevant. If a person committed murder in 1998, should the conviction not go ahead in 2016 when the police have caught up with the perpetrator? There will no doubt be other cases which come to the surface over time.k all about it , untill of course their pet Euro project hit the rocks of their incompetence . This is nothing other than a money grab for "any excuse" very, very Soviet Union. If the EU was disbanded (due to its horrendous autocratic/ communist approach), it would further increase costs for Apple as corporation tax would be levied by 28 different jurisdictions at 28 different rates. Apples obvious approach to this would be to increase prices in each jurisdiction just to cover the 28 fold increase in overheads. (all approx. of course
). It is far better for consumers and Apple to keep a level playing field and trading in a synchronised EU. Obviously, this will shortly have no impact on the UK, as Article 50 will be invoked and Apple will just increase prices to cover the UKs corporation tax and need to set up over heads in the UK only. (coincidentally this may benefit the UK rather than harm by bringing in extra tax revenue but at the cost of higher retail prices - to give a little balance to the Brexit/ EU debate)
Naturally all IMO....
Mike
Alpinestars said:
The point here is that given the profit has been booked in Ireland, why did the Irish tax authorities allow only a small percentage to be subject to Irish tax.
Not wishing to be obtuse, as that is not my intention, why whould the Irish tax authorities not allow it? Particularly if they see other advantages from doing so which outweigh or potentially outweigh any disadvantage(s) for example...or simply because it's their own decision to make - or should be (yes I do appreciate that Ireland continues to carry the misfortune to have ongoing EU membership).
Alpinestars said:
turbobloke said:
Why should Ireland not have the freedom to treat companies however it likes?
Because it's in the EU and subject to EU law, including State Aid law. It's illegal to give State Aid in the EU. All of you Remainers have told us that the EU is not about "Ever Closer Union".
Surely, a bright chap like yourself can see that if the EU is dictating Corporation Tax rules, then this is another small step on the road to "Union".
turbobloke said:
Not wishing to be obtuse, as that is not my intention, why whould the Irish tax authorities not allow it? If they see other advantages from doing so which outweigh or potentially outweigh any disadvantage(s) for example...or simply because it's their own decision to make - or should be (yes I do appreciate that Ireland continued to have the misfortune to have ongoing EU membership).
Also not wishing to be obtuse, that's not what's in point here. Broadly, Ireland can set whatever tax rate and laws it wants. Had it set the law to apply to all companies, the EU would not have batted an eyelid.
The point is that Ireland allowed favourable rulings to Apple (for obvious commercial reasons). Those rulings were not available to all companies operating in Ireland. And that "favouritism" has been deemed to be State Aid.
s2art said:
jsf said:
s2art said:
don4l said:
My feeling is that Ireland would sooner leave the EU than force Apple to pay this fine.
I dont understand how Ireland can force Apple to pay the fine. What Irish law has Apple broken?What your point does raise is the question of whether Ireland may be subject to further action by the EU and fines against Ireland are imposed if found guilty in court for breaking EU laws. I'd love to be in the room when that one happens. This may be why the Irish government has not yet formally challenged this ruling and is meeting again on Friday to discuss the matter further.
don4l said:
Ireland, like the UK, joined a free trade area.
All of you Remainers have told us that the EU is not about "Ever Closer Union".
Surely, a bright chap like yourself can see that if the EU is dictating Corporation Tax rules, then this is another small step on the road to "Union".
It is not dictating tax rules. Read what I've written. All of you Remainers have told us that the EU is not about "Ever Closer Union".
Surely, a bright chap like yourself can see that if the EU is dictating Corporation Tax rules, then this is another small step on the road to "Union".
And I'm not sure of the relevance to me as to whether it's a step to Union or not?
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