Shomporko Desk:– An European Union court on Wednesday conveyed a mallet hit to the bloc’s attempts to get control over multinationals’ capacity to hit extraordinary assessment manages singular EU nations when it decided that Apple doesn’t need to pay 13 billion euros ($15 billion) in back charges to Ireland.
The EU Commission had claimed in 2016 that Apple had struck an illegal tax deal with Irish authorities that permitted it to pay very low rates. However, the EU’s General Court said Wednesday that “the Commission didn’t prevail with regards to appearing to the imperative legitimate standard that there was a preferred position.”
“The Commission was wrong to declare” that Apple “had been granted a selective economic advantage and, by extension, state aid,” said the Luxembourg-based court, which is the second-highest in the EU.
The EU Commission had ordered Apple to pay for gross underpayment of tax on profits across the European bloc from 2003 to 2014. The commission said Apple used two shell companies in Ireland to report its Europe-wide profits at effective rates well under 1%.
In many cases, multinationals can pay taxes on the bulk of their revenue across the EU’s 27 countries in the one EU country where they have their regional headquarters. For Apple and many other big tech companies, that is Ireland. For small EU countries like Ireland, that helps attract international business and even a small amount of tax revenue is helpful for them. The net result, however, is that the companies often end up paying very low taxes.
The ruling can only be appealed on points of law and the Commission Vice-President Margrethe Vestager said she will “reflect on possible next steps.”
The Irish government welcomed the ruling, saying “there was no special treatment provided” to the U.S. company. Apple likewise said it was pleased by the decision, arguing that the case is not about how much tax it pays, but in what country. Apple CEO Tim Cook had earlier called the EU demand for back taxes “total political crap.”
The ruling is an especially stinging defeat for Vestager, who has campaigned for years to root out special tax deals and better regulate the power of the big U.S. tech companies, including Google, Amazon and Facebook. Trump has referred to her as the “tax lady” who “really hates the U.S.”
Despite the setback, she vowed to carry on the fight. “The Commission will continue to look at aggressive tax planning measures under EU state aid rules to assess whether they result in illegal state aid,” she said.
The European Network on Debt and Development, a group that seeks to make the financial system fairer, said that Wednesday’s court ruling showed how tough any tax policy remains. “” If we had a proper corporate tax system, we wouldn’t need long court cases to find out whether it is legal for multinational corporations to pay less than 1% in taxes,” said Tove Maria Ryding, a policy manager at the group.
“In times like these, when we are passing multibillion-euro economic stimulus packages, we cannot afford to waste a single cent in tax revenue,” said EU legislator Markus Ferber of the Christian Democrat EPP Group.
Photo credit: AP Photo/Ng Han Guan
News source: The Associated Press