On Tuesday, the European Commission billed Apple‘s establishment in Ireland $14,5 billion in back taxes.

The E.U. calculated the sum of unpaid taxes plus interest that the innovative powerhouse has allegedly failed to pay in about 11 years. Apple, however, feels the decision is unfair and seeks to appeal the ruling. Apple CEO, Tim Cook, wrote an open letter to European consumers giving arguments against the accusation and stating what the possible implications of such would be.

Apple Store
“At its root, the Commission’s case is not about how much Apple pays in taxes. It is about which government collects the money,” said Apple. Image credit: www.digital.asiaone.com

Apple vs the E.U.

The White House spokesperson Josh Earnest expressed his concern about the impact the E.U.’s ruling may have on American taxpayers. He stated that if Apple subtracted the back taxes due from what they owe the U.S. government, it would be to the detriment of the taxpayers who would have benefited from that contribution.

The Oval Office official feels that instead of the E.U. taking a unilateral stance on the issue, the two economic powers should work together to avoid tax evasion.

Apple Headquarters
Apple Headquarters in San Francisco. Image credit: Wikipedia.

Cook states in his letter that the nature of the ruling is “unprecedented” because multinational companies’ profits should be taxed in the places where the value is generated.

A principle with which he said the U.S., Ireland and the company itself are all in accordance. Thus, because most of the research and development takes place in California, that is where the majority of the profit should be rightfully taxed.

Cook claimed that although this is a commercial truth even for European companies established in the U.S., the E.U.’s judgment will witness the changing of these laws.

Ireland’s tax collection agency, the Revenue Commissioners, stands by Apple stating that the company has not evaded any taxes calculated in Ireland that they have been found to owe.

Apple European Union
E.U. commissioner Margrethe Vestager. Image credit: Eric Vidal/Reuters.

According to the Miami Herald, the Revenue Commissioners’ chairperson, Niall Cody, stated that Apple’s profits “that are not generated by their Irish branches […] cannot be charged with Irish tax under Irish tax law”.

In addition, the U.S. Treasury Department shared their disappointment in the E.U.’s decision saying that not only could it hurt foreign investment in the E.U. but also threaten the economic partnership between the U.S. and the alliance. However, not all are in disaccord with the ruling.

Vermont Senator and former Democratic presidential candidate, Bernie Sanders, backed the EU’s decision in a tweet. He reprimanded large corporations for using “loop holes” and “tax havens” to generate even higher profits than they already receive.

During his campaign, the politician held a strong stance on income equality and bank reform proposing that the wolves of Wall Street pay more taxes to regulate a system that works in favor of the one percent.

Nonetheless, the Irish cabinet has agreed to convene on Wednesday, 31 August, to discuss and confirm plans on how they will go about appealing the E.U.’s seemingly imposed decision.

Source: Miami Herald