Apple defends Irish tax arrangement after EU launches investigation

Tech firm denies it profits from any special tax deal from Government

Responding to yesterday’s announcement by the European Commission that it is to open an investigation into tax rulings offered by Ireland to Apple, the US computer company said it had received “no selective treatment”. Photograph: Niall Carson/PA Wire

Responding to yesterday’s announcement by the European Commission that it is to open an investigation into tax rulings offered by Ireland to Apple, the US computer company said it had received “no selective treatment”. Photograph: Niall Carson/PA Wire

Thu, Jun 12, 2014, 01:00

Apple has defended its corporate tax arrangements with Ireland, denying that it profits from any special tax deal from the Irish Government.

Responding to yesterday’s announcement by the European Commission that it is to open an investigation into tax rulings offered by Ireland to Apple, the US computer company said it had received “no selective treatment”.

“Apple is subject to the same tax laws as scores of other international companies doing business in Ireland,” the company said in a statement. “Apple pays every euro of every tax that we owe. Since the iPhone launched in 2007, our taxes in Ireland have increased tenfold. Apple is proud to have been doing business in Cork, Ireland, since 1980.”

The commission yesterday announced it was to open investigations into specific tax rulings offered by Ireland, Luxembourg and the Netherlands to three companies – Apple, Starbucks and Fiat – following an informal “information gathering” exercise.

State aid

It is examining transfer-pricing arrangements entered into by the countries’ tax authorities to check their compliance with EU state-aid rules. It is also referring Luxembourg to the European Court of Justice for not complying fully with the initial enquiry.

Speaking in Brussels yesterday, EU competition commissioner Joaquin Almunia defended the European Commission’s right to probe the specific tax arrangements adopted by individual countries.

“Tax issues are an EU issue,” he said, noting that similar state-aid cases had previously been undertaken by the commission.

While member states retain the right to set income and corporate tax rates, the competition division of the commission can examine individual tax arrangements of countries with companies, if they suspect such arrangements give a selective advantage to a company or group of companies.

The commissioner said his directorate-general is also gathering information from Belgium and Britain, including the British protectorate of Gibraltar, on transfer-pricing arrangements with specific companies. The commission also sent requests for information to nine member states – not Ireland – on the use of patent boxes, which provide companies with tax relief on patent income.

Advantage

In relation to Ireland, Luxembourg and the Netherlands, the commission said yesterday that it had reviewed the calculations used to set the “taxable basis” in the three tax rulings in question, and has concerns they “could underestimate the taxable profit and thereby grant an advantage to the respective companies by allowing them to pay less tax”.

Mr Almunia, who will finish his five-year term as competition commissioner in October, rejected claims the investigation could lose momentum when the new commission assumes office. “The services of the commission will not stop working because their bosses will change,” he told reporters in Brussels.