Apple Challenges EU Over $13.6 Billion Tax Bill

Chris Gaetano
Published Date:
Dec 19, 2016
By Roberta F., CC BY-SA 3.0

Apple does not believe it should have to pay $13.6 billion in taxes and is planning to mount a court challenge against the European Union, which said that it does, according to Bloomberg. The European Commission, the executive arm of the EU, ordered Ireland to collect the massive tax bill from Apple on the grounds that the republic used unfair deals to reduce the company's effective corporate tax rate as an incentive to set up shop there, saying that the rules were too inconsistent to be the basis of firm profit allocation rules, Bloomberg reported. Apple has decided to take the matter to the General Court in Luxembourg to argue its case and, it no doubt hopes, avoid having to pay such a massive amount of money. Ireland, which previously balked at the order, is launching a separate appeal of its own.

The matter could provide an important test case for the legitimacy of a series of efforts on the part of the EU to get stop what it sees as tax dodging by multinational corporations, with authorities there probing the tax practices of other companies such as McDonald's, Starbucks and Amazon. The conflict encompasses not only multi-billion businesses but their host countries as well, with Bloomberg saying similar court appeals have been filed by Luxembourg, the Netherlands and Belgium concerning their tax arrangements for multinational corporations.

Should Apple have to pay the entire tax bill at once, it would wipe out the company's entire fourth-quarter net profit of $9 billion, according to an Apple press release. It does, however, also have $20 billion in cash on hand, and $321 billion in total assets, according to its fourth-quarter financial statement.

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