Apple May Owe $8 Billion To the EU After Tax Ruling (bloomberg.com) 148
Robotron23 writes: An investigation by the EU Commission may make Apple liable for up to $8 billion in back taxes. Bloomberg Intelligence estimates Apple has paid only 1.8% tax on profits between 2004 and 2012 — this ruling increases their liability to 12.5%. This decision comes hot on the heels of a tax avoidance settlement Apple reached with Italy last month for $347 million.
Good! (Score:4, Funny)
Bummer!
And now Ireland gets punished by having to accept those 8 billion dollars of back taxes, that will teach them.
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Steve Jobs must be doing 8 billion R.P.M.
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At least we know what the cash is for. [cnn.com]
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Follow the money. EU politicians aren't getting political donations the way US and national governments in Europe are.
They want some too! Why d'ya think they went into power to begin with?
$8 billion only? (Score:3, Insightful)
Great deal apple managers!
Greek pensioners and the debtor countries still have to pay a high price for the tax hole your evasion created.
Re:$8 billion only? (Score:5, Insightful)
^This
The unfortunate side-effect of tax avoidance: lower wages means lower standard of living, which leads to lower health and education. Then, to compensate for that, the government has to create programs. If the government can't fund those programs (because low wages means low tax revenue), then they shut them down, which increases the lower standard of living, health, and education.
Tax evasion really screws things up for everyone, in the long run. A few hundred dollars a year from everyone is a lot, so it's not just the super rich, big corporations.
It may be politics, too; maybe the corporations know that, if the tax dollars can't be collected, they'll end the programs. It will hurt the other party's image, and thus, their friends get elected, thereby passing laws to help their greed a bit longer.
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$8 billion won't dent Greek's debts, much less divided among Europe.
The problem lies squarely and mechanically on the ability and desire to borrow from future generations to pay for current consumption (and not for things that arguably benefit future generations, like infrastructure, and war.)
These are literally people who didn't sav enough for retirement, not just personally, but through government plans either. They don't carry their own weight.
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Re:$8 billion only? (Score:5, Insightful)
This is a well known fact in political circles, of course. A few years ago an entrepreneur started a fiscal consultancy firm to advise smaller companies on how to avoid paying tax on profits, and to do the legal and bureaucratic legwork for them for a reasonable fee. It didn't take long for the tax office, the finance minister, and the public prosecutor to catch on, and they went after him with a vengeance. Can't have the little people have their break after all... In that sense it is only fair that they are going after the big boys now... as long as they stay within the law doing so, and only prosecute for actual wrongdoings, not just for "unethical behaviour"
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The better solution is just to abolish corporate income taxes. Corporate taxes ultimately come out of the pockets of real people anyway, whether customers (in the form of higher prices), employees (in the form of lower wages) or investors (in the form of lower gains), so corporate taxes are really just a way to tax real people (AKA "voters") in a hidden way. They don't know they're paying those taxes or how much the taxes are because the taxes are washed through the corporation -- which incidentally makes i
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You know the best way to abolish corporate income taxes? By abolishing corporations.
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You know the best way to abolish corporate income taxes? By abolishing corporations.
Because we didn't really want that developed world society anyway.
Re: $8 billion only? (Score:1)
Says dipshit in his corporate built house, on corporate built computer, with corporate built software, wearing corporate built clothes, while his wife is out fucking a CEO while he sits around crying about corporations.
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You know the best way to abolish corporate income taxes? By abolishing corporations.
What alternative structure would you use to perform capital-intensive projects? Unless you're going to turn all production of goods and large-scale services over to government (we've seen how well *that* works), corporations, or something very much like them, are necessary to provide a means for many individuals to pool their resources in order to do big things... big things like manufacturing essentially all of the goods that you use on a daily basis, including the computer you're reading this on.
While c
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... A few years ago an entrepreneur started a fiscal consultancy firm to advise smaller companies on how to avoid paying tax on profits, and to do the legal and bureaucratic legwork for them for a reasonable fee. It didn't take long for the tax office, the finance minister, and the public prosecutor to catch on, and they went after him with a vengeance. ...
Evidence/References please? I don't doubt you, I want to learn more. FYI, there is a UK-tv programme coming up Wed 20th Jan 2016 on a similar subject, I haven't seen it yet so I don't know the details. ref is
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Lower wages lead to lower prices, which means standard of living isn't necessarily diminished by as much as wages are, and lower prices generally means more tourism. If prices and wages are lower, then while tax revenues are also low
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What do you mean by pathetic product evolution? The low-end Mac mini went from a 2.5GHz dual-core i5 down to a 1.4GHz while at the same time removing the quad-core i7 in the high-end model [wikipedia.org]. And let's not forget the non-upgradable memory which is now soldered on-board!
Oh wait.
Apple is not "The world’s largest company" (Score:1)
http://www.independent.co.uk/n... [independent.co.uk]
"Based on its est reserves & a (conservative) valuation of $10 p barrel, #Aramco cld be worth more than $2.5 tr. 4 times the size of Apple"
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"Based on its est reserves & a (conservative) valuation of $10 p barrel" :rolleyes:
They're comparing one company's total future raw material value to another's present stock value? And you think that's interesting?
The measure in question is the total *possible future value* of the company. Eventually they will run out of oil and be worth nothing. They are estimating total sales between now and then.
In comparison, Apple has nothing to run out of and can continue selling updates to their existing products
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Their infinite innovator died a few years back. Currently it's back to golden parachute squatters hoping to bail before their lack of innovation loses too much value.
Net present value (Score:4, Insightful)
They're comparing one company's total future raw material value to another's present stock value? And you think that's interesting?
Sure. Present stock value is a consensus estimate of the Net Present Value [wikipedia.org] of all future free cash flows [wikipedia.org] of a company. In both cases you are looking at an estimate of the future prospects of the company.
The measure in question is the total *possible future value* of the company.
Correct. That is what is being measured in both cases, albeit with a different measuring stick.
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As far as economics go it was a slam dunk. If there is room for complaint, it is in the area of communication; there are other even stronger refutations that might have been used. ;)
And Apple isn't the "world's largest company." But the attempted demonstration using Aramco was a total failure. Hyundai would be a much better example, with about 70 times the market capitalization of Apple. Apple does tend to have the world's largest "war chest," because other companies re-invest more of what they're not using
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And Apple isn't the "world's largest company." But the attempted demonstration using Aramco was a total failure. Hyundai would be a much better example, with about 70 times the market capitalization of Apple.
And you just won the price for being the Internet's greatest dummy.
When you take Apple's market caps in US Dollar, and Hyundai's market caps in South Korean Won, then Hyundai's number is 70 times higher. However, one US dollar is worth about 1,200 Won. So when converted to US Dollars, Apple's market caps is about 18 times higher.
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Good catch, but that is actually that is just Hyundai Motor Company. It is less than 6x once you include the rest of the Hyundai Group.
However, when you compare revenue then Hyundai is bigger than Apple. And if you use the 10 year average, it isn't even close.
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Well at least you can say that $1bn revenue each day is easily met by the US company walmart, and, if you look at absolute numbers, walmart has even more revenue per year than Aramco. But probably 99% of aramco's revenue is net income, while walmart has to pay for the products they sell, and their much higher number of employees (50x as many).
Tim Cook disagrees (Score:5, Funny)
Tim Cook says Apple pays every tax dollar it owes [arstechnica.com]. Maybe the key word is dollar here. He never said Apple pays every euro it owes!
Re:Tim Cook disagrees (Score:4, Interesting)
No, they just creatively define "owes" like every other corporation who feels it should be their right to not pay any taxes.
When broke humans pay more as a percentage in tax than mega rich corporations, there's a problem.
Given that they've been outsourcing all the fucking jobs, they don't get to pretend like they drive the economy any more.
Corporate tax rates should increase proportional to job cuts and off-shoring ... that way they can stop fucking pretending to be the economic driving force they no longer are.
What's that? You laid off 25% of your work force to move it overseas? Well, that will be a 25% tax increase, assholes.
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Re:Tim Cook disagrees (Score:5, Insightful)
They didn't change their minds. Apple thought it had found a way to avoid a lot of tax, but the courts disagreed and said that they misinterpreted the rules.
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To be more specific: Apple negotiated with Ireland to have effectively a lower rate, by agreeing to a specific amount ahead of time, which both knew was too low, and in return Apple moved much of their profits into Ireland (by using "transfer pricing" games). So Ireland got more tax revenue than they would have, while Apple got to pay lower taxes. Of course this denied the tax revenue that would have gone to other countries.
The problem for Apple here (beyond any morality involved), is that the European Unio
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I guess it didn't enter into their thinking that if those loopholes really existed, the European companies would be paying less tax. Why would Apple think it would pay less local tax than the locals? It seems like an irrational expectation.
If Apple was being told to pay more than what average European competitors pay, then I might be more sympathetic to your point.
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I guess it didn't enter into their thinking that if those loopholes really existed, the European companies would be paying less tax. Why would Apple think it would pay less local tax than the locals? It seems like an irrational expectation.
What makes you think that the big European companies pay more taxes than Apple? E.g. Fiat has been ruled to pay to little taxes in Europe because they shelter in Luxembourg.
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Seriously where did you go to get those ridiculous statements? The laws didn't change along the way. Apple thought they found a loophole and tried to exploit it, well, according to the law - i.e. the rulling of the courts - Apple was wrong, though luck. No new laws where passed along the way like you are implying.
Also it's quite interesting that you are taking sides with a bunch of billionaire pricks that hire a battalion of attorneys in order to try and find loopholes to avoid paying taxes while the common
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Seriously where did you go to get those ridiculous statements? The laws didn't change along the way.
Exactly. They didn't change - yet. That's why "Apple may owe tax after ruling (which hasn't happened yet)". Gees, how fucking difficult is understanding that?
Taking tax advice from you guys is a sure way to get in touch with the law.
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You clearly don't understand the concept of ruling.
You clearly don't understand the concept of RTFA. You should try that before you look any dumber. The whole lot of you.
Key segments from TFA:
European Commission investigation seen concluding by March
If the Commission decides to enforce a tougher accounting standard, Apple may owe taxes
There has been no ruling yet. Period. And if that ruling comes, (and if that ruling actually comes out as expected - it still may not) it means the Irish tax laws will have to be changed retroactively. To be fair, that information can only be found in better articles. Like this (older) one [irishtimes.com] or this [forbes.com]
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It's like a shoplifter saying he paid for everything he bought or a groper claiming that his hand never left his arm.
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Sometimes I feel like I'm the only person who was listening when he said that, because people keep thinking he said "Apple paid already every tax dollar it will owe for years in which we've already filed." But that isn't what he said. He said that they pay everything they owe. If their filing is rejected or revised afterwards, then his statement is just a statement of fact that they'll pay it after they're found to owe it. It was a complete non-statement. He could have said instead, "look, we're a business
Only by their self-declared accounting. (Score:2)
In reality, the EU disagrees and sees Apple as being $8 billion + (interest and penalties) short.
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Tim Cook says Apple pays every tax dollar it owes [arstechnica.com]. Maybe the key word is dollar here. He never said Apple pays every euro it owes!
Errm, TFA doesn't say anything about "owing" money, but that it could in the future owe back-taxes because Ireland didn't ask for enough taxes.
Anyway, if you think this is bad news for Apple, think what it means for other companies (mentioned in TFA, read it) who will have a much harder time paying their back-taxes, not to mention the IRS, who will get less taxes if Apple ever brings home their foreign money.
*May* owe $8 billion (Score:4, Insightful)
They may owe 8 billion, but what's the chances they'll actually have to pay that? If this were the US, they'd end up just making a settlement for a tiny fraction of that.
Since this is the EU, who actually make more of an effort to hold corporations accountable for their greed, the amount would be comparatively larger, but I still have trouble seeing them extracting the full amount.
Re:*May* owe $8 billion (Score:5, Informative)
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We don't have "settlements" in EU like you do in the USA. When a case is presented to a legal court (consumer arbitral court is different) the matter can only get settled by the court itself, the parties cannot go around the court. The only thing they can do now it to appeal to an higher court.
That is exactly how it works in the US too, settlements are done through the court whenever a case has been filed, and a response also filed. So once you're past the very first step that happens before any court hearings, then the settlement has to go through the Court. Sometimes settlements are rejected by the Court, too.
However, in this case it is a Commission investigation, not a court case. That will follow. And most likely, there will indeed be a settlement, because that is how these things usually end
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You seem to be under the illusion your member states can squabble to provide tax havens, catch American corporations in them, then point Fingers of Shame and retroactively change the rules. It is like two fishing boat captains arguing, and the crew blames the argument on the fish. I used to think Europeans were educated, but I guess that's been slipping.
Re: *May* owe $8 billion (Score:4, Interesting)
The problem with that claim is that the accusation isn't that they were in the past out of compliance with a rule that didn't exist yet. If that was the situation, I'd understand your claims.
But the actual situation is that they're accused of imagining loopholes instead of doing their accounting by the rules, and so they didn't pay what they were supposed to. Very, very different accusation than the one you're trying to defend against. ;)
As an American I have to point out, it would really benefit the US if Europe cracks down on this. The whole game was to avoid US taxes in the first place. Europe has higher taxes than the US, we shouldn't be losing tax revenue due to that competition. It is only because the US companies are not paying the local European taxes that these shenanigans benefit the practitioners. US and EU both lose out, and some rich investors around the world get a bunch of misappropriated loot.
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Yeah the tax evasion practices done in tne US aren't given tacit approval in the EU so now all apple can do is shot themselves in the foot taking their ball and going home, or admit fault and pay up to industry standard taxes their competitors are all paying.
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I don't know if you are the same "Anonymous Coward" answering above but you seem to be under the very wrong impression of what Apple is actually doing here and what those "tax exemptions" are supposed to cover.
Apple business here, is selling their products. Period. They don't do R&D in Europe, they don't produce their products in Europe and their job creation in here is minimal. This is not what the tax breaks are there for, obviously. Nothing grave would come to EU if Apple just went away except that c
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Europe has tax "havens": Ireland and Luxembourg. They have deliberately extreme tax policies so they can lure companies from all over the globe and tax them.
Oh please, not this rubbish again. Irish corporation tax rates are lower than in some countries, yes, but the tax "avoidance", if you want to call it that, that Apple practices has nothing to do with that. They use inconsistencies in corporation tax residency between countries to do what they do. Effectively they tell the Irish tax man that they're an American company, so their tax dealinsg are all with America, other than some stuff that is obviously local. In America, they say "oh, this was all in Europe,
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This is tax "minimization" or tax "avoidance". All people are supposed to practice it, and it's through this mechanism that you can set public policy through tax policy, ex. solar rebates.
No, that is not the "mechanism that you can set public policy through tax policy" at all, and no, "all people" are not "supposed to practice it".
The "mechanism you can set public policy" *is* tax. That's the reason it exists.
"Tax avoidance" inevitably involves schemes of varying complexity to move money around, obfuscate
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Europoors like to punish US tech companies because Europe can't be remotely competitive in tech
Oops [wikipedia.org].
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In the top-100 of that list, I could recognize "Nokia" as a only known tech company. The majority of large European companies seem to be in the Energy, Utilities, or similar government sanctioned monopolies, or older industry like Automotive. They have much higher revenues compared to tech companies, and I would assume their average age is around 100 years old.
To whom much is given... (Score:1)
Doesn't seem like Apple is holding up their end of the deal.
Apple is cheating on their taxses... (Score:5, Informative)
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Or they pack up shop and go home. I'd love to see those brands simply say "no thanks we're pulling out" and watch the populace riot without their creature comforts.
Apple pulling out would not mean their products are not available. Some other company would import it, and sell it. As a net result they would simply loose sales (due to presumeably higher prices), let someone else get the retail profit (the import company would also get it's share), and they would need to pay US corporate tax on sales done in Europe.
IMO the EU is too big of a market to play "that will teach them" games with...
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I can see it now... the anger building, the hyperbole boiling out of control, incitements to rash action from the crowd... and then it starts. One man just finally snaps. Throws his Earth Sugardrink right down onto the unprotected street surface. Complete chaos begins, with wailing and even littering. First one, then two, three [insured] iPhones go flying through the air and smash at the feet of the chuckling riot police, who covet this overtime in a land of short work-weeks.
The next day, two lawsuits accus
Crying all the way to the bank (briefly anyway) (Score:5, Insightful)
Apple has, what, $200 billion in the bank? Their quarterly income is what, $50 billion? I'm sure they're quaking in their boots.
Here's the absolute "worst" case scenario for the company: they pay the fine from change they find on the cafeteria floor, and then send out a press release with a mild complaint about it but saying they're happy as long as the money is put to good use. Ireland cuts them a side deal for the inconvenience, and Apple agrees to remain in Cork for the foreseeable future.
So basically zero change whatsoever.
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Well one nice result would be if they move back tax operations to North America/USA, seeing as though they're paying it anyways.
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Should be hit with a penalty. I mean heck, 1.8% instead of 15%? Any accountant should have spotted that one.
I'm sure they'll simply write them a check. Here you go. Don't spend it all in one place.
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The problem with that theory is that this is an EU commission. They'd have to bribe somebody from each country, and the late recipients can demand increasing payments as the bribery scheme is spiraling out of control. You might end up paying double, and then still owing the original debt after the lid gets blown off of it.
Even European soccer is encountering difficulty maintaining their traditional corruption in this environment.
To owe is not to pay (Score:2)
Apple May Owe $8 Billion To the EU After Tax Ruling
Sure, they might owe it. They'll probably never get around to having to pay it, though. About 0.1% of that amount should be more enough to pay for the lawyers to keep it tied up in court indefinitely.
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"indefinitely" means you don't know how long it will go on. It doesn't mean it goes on without ending. The wheels of justice grind, and money may slow that down, but they do keep grinding.
Good (Score:2)
12.5% seems like a bargain (Score:2)
Honest Company (Score:2)
An honest company would pay 30% of its revenue as tax. And they would not try to trick, as they know without a working state and society they cannot exist. However, all the big companies ignore that, as they do not feel responsible for the mayhem they cause and the effects do not occur immediately. Therefore, like a 2 year old they ruin their surrounding. Unfortunately, there are no parents around to stop them.
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Where do you get this? Is it a figment of your hippie mind?
Re: Honest Company (Score:2)
That is what all the small companies have to pay here in good old Europe. Therefore, big companies should too.
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That is what all the small companies have to pay here in good old Europe. Therefore, big companies should too.
What a bloody idiot. You say small companies have to pay 30% of their revenue in tax? UK Corporation tax rate in 2015 is 20% _of profit_, not on bloody revenue. If you don't know what you are talking about, shut up. Or do you really not know the difference between revenue and profit?
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Ah, the famous "you're wrong because... hippies!" argument. Slam dunk, right?
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No, it's utter baseless nonsense, and not amenable to logical rebuttal. In fact, it's "not even wrong", merely illucid.
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Well, if it is "wrong" to utter baseless, illucid nonsense in the context of commentary is a moral question.
I stand by it being wrong. You should be mildly embarrassed, at least. If not... shame on you.
But actually, your defense is a failure. It isn't baseless nonsense at all; it is nonsense based on the claim that hippies have some sort of mental deficiency that leads to an inability to tell imagination from reality. Therefore, it is not even entirely illucid. Just hateful, and such a weak statement that i
Re:Honest Company (Score:4, Insightful)
All companies take advantage of the methods given to them to reduce the taxes owing. If the governments don't like them then they shouldn't have provided the methods in the first place and change the tax code.
And why would a company pay 30% of it's revenue as tax? What if their margin is only 5% or 6%? Organizations don't pay taxes on revenue but on profit.
So may I assume that you don't make use of any deductions on your income tax? After all you should feel responsible for your impact on society.
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Because years ago, someone decided that instead of "profit", "net revenue" was a better term to use. There is probably some technical difference between "net revenue" and "profit", but the term is confusing to many.
In this case, I think that the GP means 30% of net revenue.
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Because years ago, someone decided that instead of "profit", "net revenue" was a better term to use. There is probably some technical difference between "net revenue" and "profit", but the term is confusing to many. In this case, I think that the GP means 30% of net revenue.
Well, then he should have said so, because there sure as hell is a difference between "revenue" and "net revenue".
Re: Honest Company (Score:4, Insightful)
Corporations already get a sweeter tax deal than "real" people ever did. People can't deduct their rent or supplies or other daily costs of being able to get work done.
Imagine if you only got taxed on your disposable income. Better still, imagine if you lived simultaneously at home and in a tax haven, and your working self paid most of your net revenue as a skill-set licence to the tax-free self who was living it up for you in the Bahamas.
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Yes and no. My wife is self employed, with her place of business being our home. She can claim all sorts of deductions on her tax so while her income is more than mine, by the time the deductions are taken off I'm earning more.
Some of the deductions seem to me to be stupid; for instance she can claim depreciation on her car as well as portions of our electricity and home heating bills. All of which we would be paying if she were employed.it probably amounts to about 20% of her income all told.
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If you can come up with a tax regime that has broadly similar impact (to living costs, lifestyle etc) over a population with very wide differences of ability to contribute, and is also effective and enforceable, then I imagine there's some economics departments that might want to talk to you. It's not a simple problem.
The mixed income/consumption tax approach is far from perfect, but most "obvious" alternatives are worse, or are too difficult to administer or enforce.
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An honest company would pay 30% of its revenue as tax.
30% of its revenue as tax? What are you smoking?
As an example, Walmart makes $480bn revenue per year, with $34bn profit. How on earth would Walmart be able to pay 30% = $144bn in tax?
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Why should you be taxed on revenue? You should be taxed on profit.
Well, what about Amazon? They have a huge revenue but usually very little if any profit. Yet they use public infrastructure like no other company.
I have no idea... (Score:2)
If what Apple did is legal or not, but if it paid only 1.8% tax on its profits that's wrong and it should have to pay more.
WTF (Score:3)
Facebook benefit from a well educated populace?
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I'm sure you don't see the irony of your response.
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Why will I be left sobbing in the corner? And what the hell makes you think I'm an Apple fan?
Fact is, if Apple tries to avoid paying the debt, it'll find itself paying it anyway, regardless of whether it pulls out of the EU. The EU will find ways.
You're an idiot.
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Fact is, if Apple tries to avoid paying the debt, it'll find itself paying it anyway, regardless of whether it pulls out of the EU. The EU will find ways.
You're probably talking to someone who believes Apple isn't going to pay $8 billion because it has more power than the EU. And it has more power than the EU because it has more money. Seriously, that's the argument I keep hearing.
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[Apple] don't care, they'll never pay and you'll be left sobbing in a corner going "why apple?! why?".
No, I shall be laughing in the open going "Good riddance to Apple!"
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