14 DAY TRIAL // Despite doing a great job at explaining its operations to American regulators last year, Apple isn’t out of the woods yet. The Cupertino giant is now facing a repayment order by the European Commission that could shave billions off its cash pile.
The European Commission is looking not only at Apple’s tax practices, but also at Amazon’s and other big companies’ operations. The regulatory body plans to publish its initial findings in the Apple case later this week.
A tax rate of just 2 percent
In what can be considered a “tax heaven,” Ireland has a tax rate of 12.5 percent. But Apple pays even less than that. Much less, thanks to subsidiaries that can instate their own cash operations and still abide by the law.
According to regulators, Apple has managed to avoid billions in tax money by inventing ways to pay just 2% tax.
The Financial Times reveals in a report this week that Apple risks billions of dollars in fines if found guilty of conspiring to pay as little taxes as possible. Luca Maestri, Apple’s new chief financial officer (replacing the recently-retired Peter Oppenheimer), answered these allegations as follows:
No special treatment or threats
“It’s very important that people understand that there was no special deal that we cut with Ireland. We simply followed the laws in the country over the 35 years that we have been in Ireland.”
“If the question is, was there ever a ‘quid pro quo’ that we were trying to strike with the Irish government – that was never the case. We’ve always been very transparent with the Irish government that we wanted to be a good corporate citizen.”
Apple claims to be a law-abiding citizen
Maestri further defended Apple, noting that “If countries change the tax laws, we will abide by the new laws and we will pay taxes according to those laws.” Things have changed a lot in the 35 years Apple has been doing business in Ireland, and at least one tax law that has yet to pass in the country is something the company can use to aid its defense.
It’s also worth noting that the Mac maker can object retrospective inquiry over international tax guidelines, some of which are not even in effect in Ireland.
In a very assuring manner, CFO Luca Maestri said that Apple is prepared to cooperate with officials leading the investigation. Regardless of the outcome, the company would continue to stick with Ireland, he added.
“We stayed in Ireland during difficult times and during great times,” he expressly noted.