Apple is stunned by the EU Commission’s tax ruling. The company cannot understand where the numbers are coming from. Apple is paying all its taxes, says Bruce Sewell, General Counsel of the company.
Apple says it has always been about doing the right thing. How does that fit with the effective tax rate of 0.005 percent the Commission says you paid in 2014 on your combined profits in Europe and in Ireland?
We paid tax at the statutory rate of 12.5 percent tax on profits relating to our activities in Ireland. We don’t understand where the Commission’s figures are coming from. We paid $400 million in corporate income taxes in Ireland in 2014. In addition, we paid $400 million in current US corporate taxes on those profits. We also accrued several billion in US corporate tax on a deferred basis. To get to this meaningless 0.005 percent, the Commission completely ignores the fact that the vast majority of these profits were subject to U.S. taxation.
We cannot understand where these numbers are coming from. We have paid more taxes than the Commission has indicated.
Doesn’t your subsidiary in Ireland only exist to avoid paying taxes?
Absolutely not. We came to Ireland in 1980 when the company was expanding overseas and was looking for an extremely talented and well-trained workforce. We were a very small company at the time and started our Irish operations with 60 employees. Today we employ 6,000 people and we believe we are the largest taxpayer in Ireland.
Isn’t there another company that has no employees but has huge profits?
We established a non-resident company in accordance with Irish law. The company was responsible for managing our most valuable assets including research and development, intellectual property and worldwide brand outside of the Americas. These are all assets that derive from the activity in Cupertino. It did not have an office or employees in Ireland because it was not an operational business and its business was not specific to Ireland. In terms of how its profits are taxed, international tax rules dictate that you pay corporation tax where the value is created. To try and attribute all these profits to the small resident company in Ireland is to suggest that every piece of value from sales to India to contracts in Africa are attributable to the activities in Ireland and should be taxed there. And that simply makes no sense.
Isn’t the company paying low taxes relative to the enormous profits you generate from your products?
No, that’s not true. We pay tax on our activity in Ireland at the statutory 12.5%. We are the largest tax payer in Ireland, the largest tax payer in the US and the largest tax payer in the world. We paid $13 billion in tax last year and had a reported global tax rate of 26.4%. This isn’t an argument about how much tax we pay, but where we pay it. The European Commission appears to believe that despite the fact these profits are legitimately attributable to our head office in Cupertino and subject to tax on a deferred basis, they should be taxed in Ireland.
.Do you agree that it is not acceptable in Europe today to pay low taxes compared to your profits?
This impression is based on misinformation. We pay all our taxes, we obey all laws and we pay tax on the profits relating to the activities we carry out in Ireland at the statutory rate of 12.5 percent.
We will appeal the Commission's decision.
Will Apple remain loyal to Ireland?
We continue to invest here. However, we fear that after this decision, Europe will become less attractive for overseas investors. Should the Commission reserve the right to decide on the tax policy of your country?
Are you worried if State aid takes effect it is a sharp sword?
We are convinced that we always acted properly and have always paid all taxes.
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