Anti-U.S. bias at play in tax ruling, Cook says
Apple is the victim of anti-U.S. bias and the European Union’s 13 billion-euro back tax ruling is “total political crap,” according to the iPhone maker’s chief executive, Tim Cook.
In an interview with the Irish Independent (http://www.independent.ie/business/irish/no-one-did-anything-wrong-here-and-ireland-is-being-picked-on-it-is-total-political-crap-35012145.html), the Apple (AAPL) boss firmly defended the company’s tax arrangement with Ireland, which, according to the EU, allowed the iPhone maker to pay substantially less tax than other businesses.
“No one did anything wrong here, and we need to stand together. Ireland is being picked on, and this is unacceptable,” he said in the interview published Thursday.
Ruling that Apple’s Irish tax deal constituted illegal state aid (http://www.marketwatch.com/story/apple-benefited-from-145-billion-illegal-tax-break-eu-rules-2016-08-30), the EU’s antitrust commission on Tuesday ordered Ireland to recover as much as 13 billion euros ($14.5 billion) in taxes from the tech giant.
Read:In the European Commission’s words, here’s what Apple and Ireland did wrong (http://www.marketwatch.com/story/in-the-european-commissions-words-heres-what-apple-and-ireland-did-wrong-2016-08-30)
Almost all the profits recorded by Apple’s Irish incorporated entities were internally transferred to a so-called head office, which existed only on paper, the EU’s investigation found. That allowed Apple to only pay 1% in taxes on its European profits in 2003 and as little as 0.005% in 2014, way below Ireland’s corporate tax rate of 12.5%.
“It’s total political crap,” Cook said about the EU’s conclusion.
“They just picked a number from I don’t know where. In the year that the Commission says we paid that tax figure, we actually paid $400 [million]. We believe that makes us the highest taxpayer in Ireland that year,” he told the Irish newspaper.
Read:Apple hasn’t set aside enough to pay Irish back taxes (http://www.marketwatch.com/story/apple-hasnt-set-aside-enough-to-pay-irish-back-taxes-2016-08-30)
With his comments, Cook echoes criticism from both Republicans and Democrats (http://www.marketwatch.com/story/us-taxpayers-would-be-poorer-if-eu-wins-apple-tax-case-white-house-spokesman-says-2016-08-30) in the U.S., who claim the regulatory ruling could end up costing the American taxpayer.
U.S. Treasury Secretary Jack Lew said the commission (http://www.wsj.com/articles/treasury-secretary-lew-criticizes-eu-decision-to-issue-apple-14-5-billion-tax-bill-1472653403) had aimed “squarely at our tax base” and warned such moves could undermine the “spirit of economic cooperation and [is] inconsistent with well-established principles of tax laws.”
Cook took the same line, telling the Irish Independent he believed the commission’s move arose from “a desire to reallocate taxes that should be paid in the U.S. to the EU.”
The Apple boss also slammed the commission for appearing to focus on U.S. companies in its probes.
“I think that Apple was targeted here,” he said. “And I think that (anti-US sentiment) is one reason why we could have been targeted.”
“People in leadership positions in several countries tell me that this is the agenda. I don’t know where that comes from. But what I feel strongly about is that this decision was politically based, of that I’m very confident. There is no reason for it in fact or in law.”
Playing by the rules
But EU competition commissioner Margrethe Vestager has dismissed claims she’s being anti-American, saying she’s just playing by the rules.
“All I can say is that we didn’t open this case to upset [the U.S.],” she said in an interview with MarketWatch. “We did it to make sure we have fair competition in Europe.”
The EU Competition Commissioner stressed she’s certain the Apple-Ireland ruling will prevail against any appeal in court (http://www.marketwatch.com/story/eus-vestager-we-can-win-any-apple-appeal-2016-08-30).
“We have of course structured the case in a way that it’ll be upheld if it goes to court. That’s why it sometimes takes a long time to finish these investigations,” she told MarketWatch.
“This probe has been three years underway to make sure we really have a solid case, which I firmly believe we do.”
Both Ireland and Apple have said they plan to appeal the case. Cook on Thursday said in another interview with Irish broadcaster RTE that he is “very confident” (http://www.bbc.co.uk/news/world-europe-37242357) the ruling will be overturned.
-Sara Sjolin; 415-439-6400; AskNewswires@dowjones.com
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September 01, 2016 11:44 ET (15:44 GMT)
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