Apple defends its tax deal in Ireland amid formal investigation

Tim Cook Tax

While the Securities and Exchange Commission cleared Apple of any tax-related wrongdoing in the United States last October, the situation is quite different across the pond. As part of efforts to crack down on the special treatment of large companies, European Union competition regulators are investigating whether the tax deals that Apple, Starbucks and Fiat have in three European countries involve illegal state aid. 

Apple in particular receives a significant tax break in Europe, negotiating a tax rate of less than 2 percent with Irish authorities. The iPhone maker faced a fair amount of scrutiny last year for keeping much of its cash reserves overseas, rather than paying a much heftier 35-percent corporate tax in the United States.

“Special secret deals should be outlawed across the EU,” Chas Roy-Chowdhury, head of taxation at the Association of Chartered Certified Accountants, said in an e-mailed statement. “All tax breaks and reliefs should be openly available for qualifying businesses.”

Bloomberg obtained the following statement from Apple, which has the same narrative as what Apple chief executive Tim Cook told American senators in Washington last year.

“Apple pays every euro of every tax that we owe,” the company said in an e-mailed statement. “We have received no selective treatment from Irish officials. Apple is subject to the same tax laws as scores of other international companies doing business in Ireland.”

A recent Reuters report claims that American politicians have discussed the idea of introducing a so-called “holiday” for corporate tax repatriation. The temporary holiday would allow for large corporations to bring their foreign profits into the United States at a significantly reduced tax rate. Congress last enacted a repatriation holiday in 2004, dropping the corporate tax rate to just 5.25-percent.

Do you think it’s fair that Apple pays less tax overseas?