Apple has finally come to terms with the European Union to commence the payment of back taxes to Ireland worth €13 billion ($15.4 billion) that it was ordered to pay the country last year. Reports from the Wall Street Journal show that the decision to honor the agreement was made today following the landmark decision to cut down tax shelter policies and profit offshoring.
Even though the order had been issued since the previous year, precisely in August 2016, Ireland had refused the collection of the money because low tax rates are the country’s vehicle for the attraction of domestic investments from foreign establishments. Regrettably, this has created an avenue for companies like Apple to exploit this privilege thus making Ireland a tax shelter.
Apple had been paying as little as 0.005 percent on all European profits from 2003 to 2014 with assistance from its affiliates and shield companies designed to receive and maintain revenue from foreign countries. Apple has for a long period of time confronted the categorization of its tax schemes so much so that Tim Cook, the CEO of Apple referred to the EU commissioner’s order as a “total political crap.”
As a result of Ireland’s failure to act, the country’s government was taken to the European Court of Justice (which is the highest court of the governing body of the bloc) by the EU in order to coerce it into collecting the back taxes. In an announcement today, Irish Finance Minister Paschal Donohoe said that Ireland expects an influx of money from Apple beginning in the first quarter of 2018 into an escrow account.
Both Apple and the Irish government have agreed to engage the ruling, although it seems as if Apple executives anticipate they would recuperate the money successfully. “We have a dedicated team working diligently and expeditiously with Ireland on the process the European Commission has mandated,” Apple said this in a speech given to the WSJ. “We remain confident the General Court of the EU will overturn the Commission’s decision once it has reviewed all the evidence.”