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Apple say Irish tax calculation is a 'made up number'

Published 30/08/2016

Tim Cook accused Brussels of taking unprecedented action, with serious and wide-reaching complications.
Tim Cook accused Brussels of taking unprecedented action, with serious and wide-reaching complications.

Apple executives have accused one of Europe's most powerful watchdogs of getting her sums wrong in calculating the jaw-dropping bill for unpaid tax.

The company's chief financial officer, Luca Maestri, claimed the tech giant paid 400 million US dollars in tax in 2014 in Ireland as he joined chief executive Tim Cook to offer a doom-laden view of the fallout.

He claimed Competition Commissioner Margrethe Vestager's assessment that Apple paid just 50 euro in tax for every one million euro it made that year was nonsense.

"It is a completely made-up number," he said.

The dismissive response came after Mr Cook posted a lengthy message on, warning about devastating ramifications for the sovereignty of European countries in light of the competition chief's hard line.

"As our business has grown over the years, we have become the largest taxpayer in Ireland, the largest taxpayer in the United States, and the largest taxpayer in the world," the Apple boss said.

"In Ireland and in every country where we operate, Apple follows the law and we pay all the taxes we owe."

Mr Cook accused Brussels of taking unprecedented action, with serious and wide-reaching complications.

"Beyond the obvious targeting of Apple, the most profound and harmful effect of this ruling will be on investment and job creation in Europe," he said.

"Using the Commission's theory, every company in Ireland and across Europe is suddenly at risk of being subjected to taxes under laws that never existed."

Apple insists it is committed to Ireland, where employee numbers have grown from 60 in October 1980 and through the lean years of the early 1990s to almost 6,000 now.

But it warned about how US multinationals and others will view the prospect of setting up shop on European soil if the retrospective multi-billion euro bill stands once several years of legal wrangling play out.

Mr Cook said: "It 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."

Apple executives said the Commissioner's assessment of the Irish Government's 25-year-old tax advice was "legal mumbo jumbo".

And with officials in Dublin anxiously looking across the Irish Sea at a Brexit-focused UK economy, Mr Maestri followed up: "We really believe that the impact of this decision will be devastating for the European economy."

Apple also dismissed the prospect of a 6 billion euro interest bill being piled on top of the unpaid tax.

The company went further in its defence, accusing the Commissioner of misunderstanding its corporate structure, describing the entire operation at its original home of Cupertino, California as its crown jewels and head office.

Bruce Sewell, Apple's general counsel, slammed Commissioner Vestager's ruling on the 1991 tax advice as "astounding, stunning and very troubling".

"We think on the facts and the law we are going to win," the lawyer said.

"We are trying to sound the alarm that what the Commission is doing has real consequences."

And with Apple claiming it did not get a opportunity to defend itself during the watchdog's investigation, Mr Cook went direct to customers.

"Taxes for multinational companies are complex, yet a fundamental principle is recognized around the world: A company's profits should be taxed in the country where the value is created. Apple, Ireland and the United States all agree on this principle," he said.

"In Apple's case, nearly all of our research and development takes place in California, so the vast majority of our profits are taxed in the United States. European companies doing business in the US are taxed according to the same principle. But the Commission is now calling to retroactively change those rules."

Mr Cook said Apple supports international tax reform with the objectives of simplicity and clarity.

"We believe these changes should come about through the proper legislative process, in which proposals are discussed among the leaders and citizens of the affected countries. And as with any new laws, they should be applied going forward - not retroactively," he said.

"We firmly believe that the facts and the established legal principles upon which the EU was founded will ultimately prevail."

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