Apple Takes Step In Irish Tax Matter -- WSJ
April 25 2018 - 3:02AM
Dow Jones News
By Sam Schechner
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (April 25, 2018).
Apple Inc. completed an agreement with Ireland enabling the
company to transfer roughly EUR13 billion ($16 billion) into a
Dublin escrow account, in a step toward complying with a European
Commission tax order.
The executive body of the European Union ruled in 2016 that
Apple had underreported profit in Ireland over more than a decade
because of two tax deals with the Irish government. The EU viewed
the tax treatment as illegal state aid that must be repaid. Ireland
and Apple, which has a large facility in the city of Cork, are
appealing the decision, but the U.S. company was required to hand
over the money for the back taxes in the meantime.
Apple and Ireland have struggled to find a way to park such a
large sum. In December, they agreed on the terms of an escrow
account, but hadn't yet completed those terms or determined when
Apple should start depositing the cash.
In its 2016 decision, the European Commission said tax
arrangements that Ireland offered Apple in 1991 and 2007 allowed
the company to pay annual tax rates of between 0.005% and 1% on its
European profits for over a decade to 2014 by designating only a
tiny portion of the profit as taxable in Ireland. The commission
had given Ireland until the beginning of last year to recover the
money.
Ireland said Tuesday that Apple will pay the cash for the back
taxes, plus interest, into the account in installments next month
through September. Neither Ireland nor Apple has said how much
Apple must pay Ireland in total, though a formula has been agreed
upon, a spokesman for the Irish Finance Ministry said.
Despite the large infusion of tax revenue, Dublin has opposed
the EU decision against Apple. The tech company is a big employer
in the country, and Ireland has said its tax deals with it didn't
constitute special treatment.
"The government fundamentally disagrees with the ruling of the
commission," said Paschal Donohoe, Ireland's finance minister.
"However, as committed members of the European Union, Ireland is
intent on complying with our binding legal obligations in this
regard."
An Apple spokesman said, "We continue to cooperate with Ireland
on the recovery process," adding that it is confident that EU
courts "will overturn the commission's decision."
Setting up an escrow account and collecting the money could help
ease tensions between Ireland and the EU. Last fall, the EU
referred Dublin to the European Court of Justice, the bloc's
highest court, for failing to collect the back taxes from Apple
more than a year after it was ordered to do so.
--Natalia Drozdiak contributed to this article.
Write to Sam Schechner at sam.schechner@wsj.com
(END) Dow Jones Newswires
April 25, 2018 02:47 ET (06:47 GMT)
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