Apple vows to fight £11 billion 'sweetheart tax' bill

Apple has said it will launch an appeal at the European Court of Justice after it was ordered to pay a record 13 billion euros (£11.1 billion) in taxes by the European Commission. Although the money would be paid to the Irish government, Dublin has vowed to back the Apple appeal, fearing the ruling will deter future investment in the country.

Apple and EU in conflict over Apple's Irish tax bill

EU Competition Commissioner: Ireland granted Apple illegal tax benefits

After a three-year investigation, the Brussels commission found that the American iPhone giant had reached a "sweetheart deal" with the Irish government that allowed Apple to avoid taxation on almost all profits generated by sales of its products in the entire European single market by recording all of the sales in Ireland rather than in the countries where they were actually sold."Member states cannot give tax benefits to selected companies - this is illegal under EU state aid rules," said EU Competition Commissioner Margrethe Vestager, who added that Apple had paid just one per cent tax on its European profits in 2003 and a mere 0.005 per cent in 2014 thanks to the illegal tax benefits Ireland had granted.

The iPhone giant rejects the EU ruling

After the ruling, Apple issued a strongly-worded statement warning of the implications for future investment and job creation in Europe, where it currently employs 22,000 people. "The European Commission has launched an effort to rewrite Apple's history in Europe, ignore Ireland's tax laws and up-end the international tax system in the process," the company said. "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.  Apple follows the law and pays all of the taxes we owe wherever we operate. We will appeal and we are confident the decision will be overturned."
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Michael Noonan, Ireland's finance minister, said that he, too, profoundly disagreed with the commission's verdict and denied doing a deal with Apple. "Our tax system is founded on the strict application of the law, without exception," he said.  It was necessary for the Dublin government to fight the verdict "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".Mr Noonan added: "It is important that we send a strong message that Ireland remains an attractive and stable location of choice for long-term substantive investment."

Amazon and McDonalds are being investigated by Brussels 

Ireland, however, is not the first EU member to have found to offered tax deals to large corporations. Last year, the commission ordered the Netherlands to recover up to €30 million (£25.6m) from Starbucks, while Luxembourg was ordered to recover a similar amount from Fiat.  EU authorities are also currently investigating Amazon and McDonald's over sweetheart tax deals.Dominic O'Connell, BBC business presenter, commented: "The current focus is on the size of the bill, but there are even larger issues at stake, including one fundamental question - who really runs the world, governments or giant corporations?  "At present, it is difficult to tell. Individual governments appear impotent in their attempts to apply their tax laws to multinationals like Apple. They have systems designed to deal with the movement and sale of physical goods, systems that are useless when companies derive their profits from the sale of services and the exploitation of intellectual property."The European Commission's attempt to bring Apple to heel is on the surface about tax, but in the end about the power of the multinational and the power of the state. There is more to come; Margrethe Vestager, the Danish commissioner who is leading the charge against Apple, is warming up to take on Google.  "Europe versus the giants of corporate America will be a battle royale, and one that will run and run."

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