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Ireland decides it doesn't want Apple's $14.5 billion

The country is appealing the decision by the European Commission earlier this week

Financial trends and news by Steven Loeb
September 2, 2016 | Comments
Short URL: http://vator.tv/n/470f

If someone said they wanted to give you $14.5 billion, you'd take it. You wouldn't even think about it. The immediate answer would be, "Yes, please."

The Irish cabinet, however, has a different answer, as it has decided to appeal the decision from the European Commission earlier this week, which ruled that it was owed that amount in back taxes from Apple, the New York Times is reporting.

This is obviously not a decision that any country would come to lightly, especially given that the money would be the same amount that was spent on the Ireland's health service last year.

It took three days to come to this decision, but it isn't over just yet. The country’s Parliament is going to have its own debate about whether or not to appeal next week.

On Tuesday, Apple was ordered to pay €13 billion ($14.5 billion) due to "illegal tax benefits" given to it by the Irish government over the last two and a half decades.

This was the end result of an investigation that started over two years ago into the tax loopholes several European countries, including Ireland, were offering huge, multinational companies, such as Apple and Starbucks.

Ultimately, the European Commission concluded that two tax rulings issued by Ireland to Apple substantially, and artificially, lowered the tax paid by Apple in Ireland for the past 25 years. 

Ireland is being ordered to recover the unpaid taxes from Apple for the years 2003 to 2014 of up to €13 billion, plus interest. 

So why would any country turn down such a huge lump sum of money? There are a couple of reasons for Ireland to do this. 

The first has to do with national sovereignty, which Apple CEO Tim Cook made sure to note in a letter written "to the Apple Community in Europe," following the initial decision. 

The Commission, he wrote, "is effectively proposing to replace Irish tax laws with a view of what the Commission thinks the law should have been. This would strike a devastating blow to the sovereignty of EU member states over their own tax matters, and to the principle of certainty of law in Europe. Ireland has said they plan to appeal the Commission’s ruling and Apple will do the same. We are confident that the Commission’s order will be reversed," he said.

The sovereignty of European nations over the EU has been a hot issue as of late. This ruling comes only two months after similar persuasions led to the United Kingdom voting to leave the European Union

On top of Ireland's desire to set its own tax policy, there's also the fact that if it did collect, it could be putting in jeopardy its ability to draw investments from U.S. companies, something that has helped the Irish economy over the last few decades.

This was another point stressed by Cook.

Apple has been operating in Cork, Ireland since 1980, a time when the town "was suffering from high unemployment and extremely low economic investment," he wrote.

However, "Apple’s leaders saw a community rich with talent, and one they believed could accommodate growth if the company was fortunate enough to succeed, and, since then, "Countless multinational companies followed Apple by investing in Cork, and today the local economy is stronger than ever."

While Ireland doesn't want the money, the U.S. government would gladly take it, and even feels as though it is entitled to it, according to Reuters.

"The president will ... lead the discussion at the G20 about combating tax avoidance strategies that are implemented by some multinational corporations," White House spokesman Josh Earnest is quoted as saying.

"We need to find a way to make the global system of taxation more fair - more fair to countries around the world, particularly countries like the United States."

(Image source: kevinmd.com)


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