Apple has been doing business in Ireland for more than a decade thanks to the company’s low corporate tax rate, but it turns out the Cupertino company may have been getting an unfair advantage from the Irish government. Now the European Union is coming for Apple, demanding 13 billion euros (about $14.6 billion) in owed taxes.
The European Commission announced the ruling on Tuesday, noting that Apple reportedly paid a tax rate of one percent in 2003. The rate apparently dropped to just 0.005 percent by 2014 as the company’s profits soared. Ireland’s corporate tax is supposed to be 12.5 percent, which is still significantly lower than in the U.S.
The ruling claims that Ireland gave Apple special treatment. “Member states cannot give tax benefits to selected companies,” said European commissioner Margrethe Vestager. “This is illegal under EU state aid rules.”
Ireland has already said it will appeal the ruling, and Apple CEO Tim Cook quickly published an open letter refuting the claims. He claims they have “no basis in fact or in law,” adding that the company has created over 1.5 million jobs across the EU. “The European Commission has launched an effort to rewrite Apple’s history in Europe, ignore Ireland’s tax laws and upend the international tax system in the process,” Cook wrote.
This is the biggest tax ruling against a company by the EU in history, and it could represent a turning point in the continent’s relationships with powerful U.S. firms looking for a friendly tax haven. Apple won’t give up without a fight, though, and it should be interesting to see how this plays out.
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