Apple To Pay $15 Billion In Back Taxes To Ireland After Reaching Agreement With European Union
Apple has finally bowed to pressure from the European Union by agreeing to pay $15 billion worth of back taxes to Ireland after the order to do so was issued last year.
The iPhone maker conceded to pressure from the European watchdog by agreeing to pay the $15 billion to Ireland. The order to pay the back taxes was issued in August 2016 after a decision was reached to clampdown on profit offshoring which many companies have used to avoid tax. The one year delay in collecting the taxes was caused by the fact that Ireland did not want to collect the unpaid taxes.
Ireland had refused to collect the taxes because it charges low tax rates so as to attract investment from foreign firms. This has encouraged companies such as Apple have been taking advantage of the low tax rates charged in the country by routing their profits there. The company paid as little as 0.005 percent in taxes from 2003 to 2014 courtesy of shell companies and subsidiaries tasked with collecting and maintaining offshore revenue.
The EU has however pushed the case to the European Court of Justice which is the highest governing body in the region. The court ordered Ireland to collect the taxes and the country had no option but to comply.
“We have now reached an agreement with Apple in relation to the principles and operation of the escrow fund. We expect the money will begin to be transmitted into the account from Apple across the first quarter of next year,” stated Ireland’s Finance Minister Paschal.
Despite its compliance with the EU, Apple has revealed that it is not pleased with the decision. In fact, the software and tech giant plans to appeal the ruling together with the government of Ireland. If successful, Apple will avoid paying the huge amount of cash. The company also stated that it has a dedicated team that is working hand in hand with the government of Ireland. The iPhone maker also stated in a statement to the Wall Street Journal that it is confident that the order to pay the $15 billion in back taxes will be overturned by the court.