Tue, Sep 30, 2014 - Page 15 News List

EU to investigate Apple’s illegal state aid in Ireland


Apple Inc president and chief executive officer Tim Cook discusses the interaction between business and climate with executive secretary of the UN Framework Convention on Climate Change Christina Figueres in New York on Monday last week.

Photo: AFP

The EU is to accuse US tech giant Apple Inc of taking illegal aid from the Irish state through sweetheart tax deals over two decades, the Financial Times reported yesterday.

A European Commission investigation into Apple’s tax affairs in Ireland, where it has enjoyed a rate of less than 2 percent, found that the company benefitted from illegal state aid, the newspaper reported, citing sources close to the matter.

The report was expected to be published later yesterday, the result of a probe that began in June after press revelations made corporate tax reduction an increasingly hot political issue.

Ireland is favored as a European base by several major companies, including Amazon Inc, Facebook Inc, PayPal Inc and Twitter Inc.

Apple’s European headquarters is in the southwest Irish city of Cork, where it employs 4,000 people.

The country has a competitive corporate tax rate of 12.5 percent, which has been criticized by some other member states of the EU as unfair, but which Dublin has repeatedly defended.

However, an investigation by the US Senate last year found that the maker of iPhones and iPads paid a lower rate by channelling overseas sales through subsidiaries in a deal negotiated with the Irish government.

Apple did not immediately respond to comment, but Ireland and Apple have denied the company was given a special deal.

The Organisation for Economic Co-operation and Development (OECD) this month began efforts to crack down on “aggressive” tax avoidance by multinational companies, such as the notorious mechanism known as the “Double Irish.”

Under such arrangements, a subsidiary based in a higher-tax country pays another subsidiary based in a tax haven, reducing the amount of tax the corporation pays on overall profits.

Ireland has indicated that such loopholes could be closed amid pressure from the OECD.

The group of 34 OECD nations has proposed new international measures aimed to force companies to report their profits and holdings nation-by-nation, increasing transparency and stopping common methods of shielding profits from tax.

The accusations come at a time when Apple is facing criticism for issues relating to the newly released iPhone 6 Plus and iOS 8 software.

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