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Apple Could Cut Bill, EU's Vestager says as she Warns Others


09/02/2016


Apple Could Cut Bill, EU's Vestager says as she Warns Others
Competition Commissioner Margrethe Vestager warned that other multinationals shift profits via the country to tax havens even though do not employ as extreme Irish tax schemes as Apple Inc could also be breaching EU rules.
 
On Tuesday, a record 13-billion-euro bill for Irish registered units that Dublin authorities accepted were liable to tax in no country was slapped on Apple by her.
 
The Commission might find foul on grounds similar to Apple for those companes and firms' arrangements which involve routing profits to Irish-registered subsidiaries tax resident in places like Bermuda.
 
"Taxes have been paid nowhere due to the Irish tax code," she said.
 
Apple had an Irish registered company that booked most of the profits generated across Europe and this was the core of the case against Apple, Vestager said.
 
However, the unit was able to report just a small taxable income at an Irish "branch" as Ireland didn't deem the subsidiary tax resident there.
 
The ruling has been denounced as an unjust raid on tax that should be paid in the United States by Apple's chief executive, Tim Cook, and Washington. The assertion that Apple doesn't pay taxes anywhere on much of its profits is "simply wrong," Apple's chief financial officer, Luca Maestri, told reporters on Tuesday.
 
"These are profits that are taxed in the United States, and for anybody that understands the U.S. worldwide tax system, this is very easy to understand. We actually accrue those tax liabilities on our balance sheet on an ongoing basis and we've done it consistently over the years," Maestri said.
 
She would reduce her demand accordingly if Washington chose to tax the profits reported by Apple's Irish operation, Vestager said.
 
By forcing Apple to have its Irish units pay more in fees to Apple in California for the right to license Apple patents, this can be done by the United States.
 
"If the U.S. tax authority found that the monies paid due to the cost-sharing agreement were too few ... so that they should pay more in the cost-sharing agreement, that would transfer more money to the States and that may change the books and the accounts in the States," Vestager said.
 
If Apple next year moved funds from its Irish units to the United States by paying dividends, the bill would not be affected even though in this case, the dividends would be taxed, Vestager said.
 
Beyond two publicly announced and outstanding investigations into Amazon and McDonald's in Luxembourg, she declined to discuss which other companies' affairs were being looked at by her staff.
 
The Commission has been looking through about 1,000 such instances in the EU since being alerted to Apple's methods and other cases by a U.S. Senate probe in 2013, she said.
 
Accusations that her decision was politically motivated or driven by anti-American populism as proposed by Apple's Cook and others were dismissed by her. Most of 35 firms probed over tax in Belgium were from Europe, and those still being looked at were a broad sample while U.S. companies have been investigated, she said.
 
(Source:www.reuters.com)