The EU has interpreted Apple's tax arrangements with Ireland
as state aid not generally available and is 'ordering' the
repayment of €13bn. The diagram illustrates how the EU believe
that Apple put structures in place allowing a very low rate of
corporation tax to be paid.
The chart shows the amount of tax Apple have actually paid vs
the amount now being demanded by the EU, despite protests from the
Irish Government. €13bn sounds like a handy figure for the
Irish Exchequer but if the repayment up ends Irish Tax Sovereignty
and destroys the Celtic Tiger in the process, the short term gain
will be replaced by long term pain.
The decision will be appealed to the ECJ but it will probably
stick and it will then be very interesting to see what other cash
strapped governments do in terms of Apple's activity in their
The crux of the argument is where the most economic value is
created and taxed. Apple will argue the vast majority of the value
in their sales is in the IP, not the computer and phone kit, and
they are at liberty to domicile the IP wherever they please.
Meantime Apple looks like it is going to to remit some if not
all of its $215bn cash pile to the US where corporation tax will be
paid but probably not at the current headline rate of 35%, so
expect a tax holiday.
There will be popular support in Europe as the EU tilts at cross
border tax arbitrage, but the problem is they are undermining tax
certainty and transfer pricing principles going back 25 years. They
are also undermining tax sovereignty and the OECD BEPs programme,
which has already addressed this issue, and in the process creating
significant investor uncertainty.
Less investment into Europe, and a US administration
incentivised to modernise its tax code (long overdue) and cut tax
rates, will actually hurt Europe's competitiveness in the long
run, with a very real danger that tax wars will break out,
destroying the OECD's hard won consensus.
This is a high risk strategy for the EU and it's members and
will tangentially further strengthen the Brexiteer case in the UK.
As far as Jersey is concerned we look on with interest as we are
not a 'Treaty' jurisdiction and therefore not directly
The signing of a double taxation agreement between the UK and the UAE in April 2016 was undoubtedly much anticipated and marks a new milestone in the successful expansion of the UAE's international tax treaty network.
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