Apple tax ruling must be overturned, says US business group

apple tax ruling

US businesses have warned European leaders they risk a “grievous self-inflicted wound” unless they overturn Brussels’ demand that Apple pay the Irish government €13bn (£11.4bn), reports The Guardian.

In an open letter to the leaders of the 28 European Union countries, the Business Roundtable group defended Apple over its tax dispute with the European commission.

The US tech giant was ordered to pay €13bn to Ireland last month, after Brussels ruled that the tax breaks it was given between 1991 and 2015 amounted to unlawful state aid.

But the group of US chief executives, who between them run companies with $7tn of revenue and 16 million employees, said the decision “must not be allowed to stand”.

“The precedent set by this decision, if upheld, would increase uncertainty significantly with a consequent adverse effect on foreign investment in Europe, making this decision a grievous self-inflicted wound for the European Union and its citizens.”

It said that non-EU countries would interpret the ruling – if left unchallenged – as a signal that companies could have their assets seized by states “seeking extra revenue or seeking to punish a successful foreign competitor”.

Business Roundtable said the 185 chief executives who it counts as members were particularly aggrieved by the retrospective nature of the ruling on a tax deal reached in 1991.

“Commercial success is uncertain for any business endeavour but companies should have complete confidence that sovereign countries are committed to honouring their laws and have the authority to do so,” they wrote.

“The retroactive nature of the EC decision means that business can never have certainty even on its past tax liability unless or until the EC chooses to decide accordingly.”

Apple chief executive, Tim Cook, has previously labelled the multibillion pound demand “total political crap” and warned that it could affect investment in the EU.

The letter from Business Roundtable, which was also sent to senior politicians including the German finance minister, Wolfgang Schäuble, the European Union president, Donald Tusk, and the US secretary of state, John Kerry, echoed the threat.

It said the commission’s actions “promote tax uncertainty – and unless overturned they will disrupt trade and investment, with the most direct consequences to be borne directly by EU countries and their citizens”.

The letter called on member states to “put an end to the use of state aid investigations that will hamper economic growth by undermining cross-border investment”.

The group has previously lashed out against what it perceives as Europe’s “new and dangerous form of protectionism” amid tax investigations into American firms such as Starbucks, McDonald’s and Amazon.

The commission’s ruling against Apple was based on its objection to an agreement allowing Apple to pay a maximum tax rate of just 1%. In 2014, the tech firm paid tax at 0.005%. The usual rate of corporation tax in Ireland is 12.5%.

The commission said Ireland’s tax arrangements with Apple between 1991 and 2015 had allowed the US company to attribute sales to a “head office” that only existed on paper and could not have generated such profits.

The result was that Apple avoided tax on almost all the profit generated from its multibillion-euro sales of iPhones and other products across the EU’s single market. It booked the profits in Ireland rather than the country in which the product was sold.