Back in August, the European Commission ruled Apple owed $14.5 billion in unpaid taxes to Ireland, the largest tax penalty for a U.S. tech company. According to the Competition Commissioner Margrethe Vestager, who has made tax avoidance a chief focus, Apple made illegal deals with the Irish government that enabled the company to pay virtually nothing on its operations in Europe. Apple’s arrangements with Ireland allowed the tech giant to sidestep taxes by fueling most of its non-US sales and profits through an artificial head office with no employees, no premises, and no real activities.
In doing so, Apply paid just 50 euros per million euros in profit in 2014. The European Commission ruled that Ireland collect 10 years’ worth of back taxes from Apple, equating to 13 billion euros or $14.5 billion, plus interest.
John Browne, a notable tax consultant and former member of British Parliament, discussed the implications of this ruling during his interview with Dawn J. Bennett on Financial Myth Busting with Dawn J. Bennett.
According to John Browne, “The ruling is threatening first of all the reputation of Ireland as a low tax nation. Secondly, the ability of these companies that have come there for the low tax to generate very high paying jobs, most of them in high-tech industry, and therefore contributing very much to Ireland’s economic growth and prosperity. And thirdly, challenging the freedom of a nation to set its own tax rates.”
He continued, “We’ve all got to wait for this Court’s decision to even have a view on that, but if the Court decides in favor of the unelected European Commission, I think it will be awfully tempting for Ireland to join Great Britain in exiting the European Union and coming back much closer to Britain, outside the EU.”
Browne explained that if the Court finds in favor of the Commission, then companies like Google, Amazon, Starbucks or Microsoft will all be on the line.
“A lot of these companies that have gone to Ireland to benefit from not only the low tax rates of Ireland, but three other things that Ireland offers that the rest of Europe is not so easy to offer,” Browne said. “One is they speak English; the second is they use English law, which is the same as American law because it was developed from English law, rather than the Napoleonic Code; and thirdly, they have close relationships with the United States and all the former UK Commonwealth and colonial countries like Canada, Australia, South Africa, and most importantly perhaps, India, which is a rising economic superpower.”
To view John Browne’s complete interview with Dawn J. Bennett, click here.