Tim Cook: EU lied about Apple taxes. Watch out Ireland, this is a coup!

Re: On the radio this AM

Is the interview available online?

Re: On the radio this AM

Listen carefully to what he said, it was something along the lines of "we paid ... corporate income tax".

Does he actually just mean employees income tax which, I assume, is sent to the treasury before the money is paid net to the employee? It would have been good for the interviewer to have been a bit harder on him and specifically asked how much corporation tax they paid that year to anywhere in Europe and how much revenue and gross profit they made in Europe. I think he would have stumbled on that one.

The point is, there is no reason to have the company structure that they have if they were paying all the expected European taxes. The fact that Ireland allowed it amounts to not making them pay 12.5% on profits in Europe. That amounts to artificially helping a company - state aid. Similarly Ireland would not be allowed to charge them the full corporation tax rate but allow Apple to make special one off iPhones for the Irish government that they would purchase for 100 million Euros each.

Re: On the radio this AM

He is playing it like a politician. The empty promise to repatriate income so he can trying playing USA against Eu is just priceless.

The Eu has built up decades of experience in fighting taxation derived state aid cases against member governments and local governments in member states. So far, on the current competition commissioner's watch, 40+ multinationals including Fiat, Starbucks, BP, etc have failed to challenge similar decisions so he can continue the bravado as much as he wants. It will not help against the knitting lady - she gives no quarter.

I have zero sympathy for him in any case. As I have said before, money is like manure, you need to spread it around to make new things grow. In that respect, the state "inefficiency" is actually beneficial directly and indirectly when redistributing money obtained via taxation. The direct benefits are obvious: when money was mostly circulated in-country and taxed in the 60-es and 70-es we had significantly higher proportion of GDP dedicated to R&D in the developed world. We also achieved more as the state was subsidizing fundamental science instead of the current VC/Multinational driven money spend on yet another social bollocks sharing economy startup.

The direct and obvious effect on R&D spend, however, pales by comparison to the indirect effect. When money is taken out of circulation in quantities comparable to countries' GDP (as it is now) and Leprechauned (as by Mr Jobs and Mr Cook), inflation drops forcing multiple levels of perversion of the market by regulators: quantitative easing, forced stimuli, etc. That in turn hurts all (but the super-rich) across the board. So, frankly, from a long term socio-economic perspective we should all keep our fingers crossed for the knitting lady to succeed here. Unless we want to live in a Elysium like dystopia of course.

Re: Well, bears in the woods etc.

'..They use the same kinds of parts and same factories as products selling for a fraction and they have a four times bigger profit margin... ...generic HW with USA gloss...'

And there you have it. It's everyday gear, so all that extra profit must lie in the IP (design, ecosystem, brand etc.). And that is based in the US, and taxed under US rules. So Ireland hasn't provided state aid and this ruling is either the start of a political land grab or, more likely, just for some big headlines.

Re: Well, bears in the woods etc.

"greed". So the company, which employs people, makes things of value that people want, is greedy, but the EU apparatchiks, who produce nothing but always want a cut of the profits ( but none of the losses), are not greedy. See exhibit B, collectivist mindset.

Re: Well, bears in the woods etc.

Wow. This is a hollow a comment as you'll read about tech.You managed to say nothing imaginative or relevant in just over 200 words. I wrote a pithy and detailed response but before posting it, I realised that you really are not worth it. You are just another gobshite commenter talking about something that they clearly know nothing about. And it's really dull.

Re: Well, bears in the woods etc.

anon obviously - this tax dodge is worked everywhere.

I worked for years for a UK company in the US - this company (currently listed on the UK stock market) arranged its accounts every year so that the sales made in the US were always unprofitable. Every year we had to send all our accounts to the UK at the start of December and each time, before the end of December, we would receive a management services invoice that nulled out our profits.

I left the company many years ago - in part because I couldn't believe that they would keep on getting away with this and didn't want to have any part in it, and because running an unprofitable company means that you get paid very little and have no influence on corporate policy. It seems that they continue to make most of their profits in the US, I've no idea how they handle their accounting these days but the upper management hasn't changed so it's a safe bet their tax dodging hasn't changed either. Their stock price is doing nicely however.

"Their accounting and tax may be legal"

Or maybe not. The EU commission found that the Ireland headquarter was a fictitious entity, set up purely to avoid taxes. In many countries, it is illegal to do such a thing. Consider what might happen to you when you just make up stuff in your tax return declaration to avoid paying your share.

I believe that Apple might be in quite some trouble once the national tax authorities in the rest of the world wake up. Good thing they got some money in the bank to get this sorted out :).

@Mage wow, so many wrong statements in that trolling post

"their greed is now clearly exposed" - Please list the large multinational companies that don't try to minimize the amount of taxes they owe/pay.

"less evil kind to Google and Facebook" - From your first few paragraphs it sounds like you are practically equating Apple to Hitler's more evil twin, but Google and Facebook are worse? Care to share with us your evilness scores for various companies and historic/fictional figures like Hitler and Satan so we understand the degrees of evil you are able to divine?

"They don't spend very much on real R&D" - Apple's R&D budget is over $10 billion. That BILLION with a 'B'. That's more than the revenue of most companies. Or is it somehow not "real R&D" to you if it is Apple doing it? If so, what do you consider real R&D, and which companies are doing it?

"Most of their innovations are bought in" - that's true for most companies. You didn't think Microsoft invented DOS, Word or Excel, did you? I guess they invented Windows, but only after they'd had a look at the Mac once Apple had figured out how to take a GUI out of the lab (which they compensated Xerox for in terms of stock options, and saw with their permission) and work it into something ordinary people could use rather than the PhDs who used Xerox's Alto prototype. The only thing Google invented was search, they've bought in everything else from Android to Maps to their advertising network that actually makes all their money. And they didn't even invent search, they just invented the 'page rank' algorithm that made search better (well until SEOs found it was easy to game by creating link farms)

"Where do they pay any tax on profits?" - they pay full whack on all their profits in the US, and are the largest single taxpayer in the US. More than Wall Street banks, oil companies, retailers like Walmart, and so on. US law doesn't require them to pay taxes on overseas profits until they bring the money home, and they haven't brought the money home. They arranged things overseas in an advantageous fashion for them to minimize the taxes they pay there, just as almost all large multinationals do. They make more money than any publicly traded company in the world, so they are an obvious target when tax authorities decide to start overturning couch cushions looking for more money.

"Cosmetic badge operation" - yeah, they should make everything in the US like all these other US based consumer electronics companies do like Samsung er I mean Panasonic er I mean Lenovo er....oh wait US companies...I know Dell, nope guess again, IBM, nope guess again, Microsoft, nope guess again...

Re: Just dumb

Ireland's interest isn't collecting back taxes, in fact they're appealing. They would get €13bn now and probably have to hold the door open while the multinationals leave in an orderly fashion later. They would prefer to carry on having a goose which lays golden eggs.

Re: The EU Commission has sinister plans to control tax rates across the continent

Well if it hasn't at the moment it soon will have; I suspect that everybody (except the large corporates) is getting heartily sick of the "now you see it; now you don't" methods of accounting that multinationals use to minimise their contributions to the wider societies in which they operate. The current approach is little short of pillage; grab what you can and disappear as fast as you can, or least make the money disappear so that you are still around to grab any more that happens to come along.

As the EU Commission has pointed out, this is not a simple matter of tax due on Irish sales as much as allowing other profits to pass through the accounts unchecked. I never thought I would ever raise a cheer for the EU but on this occasion I have made an exception.

Tim Cook might just find out that the old adage of "there's no such thing as bad publicity" is not universally true.

I hope...

Re: The EU Commission has sinister plans to control tax rates across the continent

Well maybe Mr Cook could arrange a meeting with commisioner Vestager at the 'Head Office' in Ireland where all the profits weren't made, with a few interviews with the HQ employees to clarify a few points...

Shouldn't take too long eh Tim???