EU Imposes $14.5 Billion Tax on Apple After Tax Avoidance Scheme Uncovered

Posted Sept. 7, 2016

MP3 Interview with James S. Henry, senior fellow at Columbia University's Center for Sustainable International Investment and a senior advisor to the Tax Justice Network, conducted by Scott Harris

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The European Union has ordered the nation of Ireland to collect $14.5 billion in taxes from the U.S.-based computer and technology company Apple. The directive issued by the EU’s executive branch on Aug. 30, stated that Dublin had granted unfair and illegal tax breaks to the tech giant. Margrethe Vestager, the EU’s commissioner in charge of competition policy, explained that under EU rules, "member states cannot give tax benefits to selected companies." Apple, which as two companies incorporated in Ireland, had negotiated a sweetheart deal with the country allowing the corporation to pay substantially less in taxes than other businesses.

While Ireland’s corporate tax rate is 12.5 percent, Apple paid Ireland an effective tax rate of only 1 percent on European profits in 2003 – and by 2014 that rate had dropped to only 0.005 of a percent. Both Ireland and Apple say they will appeal the tax. The U.S. Treasury Department complained that the tax ruling had jeopardized “the important spirit of economic partnership between the U.S. and the E.U.”

Other U.S.-based companies including Starbucks, McDonald’s and Amazon have been ordered to pay backtaxes on their European profits. Between The Lines’ Scott Harris spoke with James S. Henry, a senior fellow at Columbia University's Center for Sustainable International Investment and a senior advisor to the Tax Justice Network, who discusses how the EU demand that Apple pay billions in backtaxes to Ireland relates to the wider issue of corporate tax avoidance around the world.

For more information, visit Tax Justice Network at taxjustice.net.

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