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December 19, 2016
Apple has confirmed it will launch it legal challenge to the $14 billion tax demands of the European Commission (hereafter known as the Gaggle of Red-tapers).
The basis of the legal challenge, according to Reuters, is the method the Gaggle of Red-tapers used to come to the lofty figure. Apple is seemingly calling the Gaggle of Red-tapers a bunch of money-grabbing so-and-sos after claiming it ignored tax experts and corporate law to use methods to maximise the amount it was demanding. Such devices inflated the tax bill unduly to €14 billion, Apple’s lawyers believe.
The Gaggle of Red-tapers are accusing Ireland of dodging international tax rules, allowing Apple to shelter billions in profits in the country in exchange for keeping jobs in the country, a claim which is denied by both the accused. The current system in the European Union does not allow for individual companies to receive preferential treatment.
Apple has paid €50 million on €22 billion sales since 2011, so the Gaggle of Red-tapers do have a point, though Apple contends is has used the opportunity to squeeze the company for as much as possible, making an unjust example of a brand which will generate headlines for the gold-digging bureaucrats.
It does appear the Apple legal team has accepted it will have to pay some taxes back, but as with many legal battles, this one will come down to who has the best negotiating team. The rhetoric in the public domain from Apple will focus on how unjust the punishment is, though this is likely to be a PR play for sympathy against the Gaggle of Red-tapers, who have gone in hard with a strong opening hand. Pessimists will argue the Gaggle of Red-tapers have never intended to recover the full €14 billion, though it’s a good starting point to negotiate down.
While keeping Apple happy will be a top concern for the Irish government, the impact should the appeal be lost could be much more disastrous in the long-run.
Number of employees (estimated)
Source: The Irish Times
The table is a cherry picked selection of some of the global technology firms who have operations in the country. The nature of the relationship between the organization and the Irish government will vary, and some may not benefit from the same tax conditions the Apple team do, though there certainly is a tax incentive for these companies to operate in Ireland over many other countries in the European Union.
Whether this saga creates ripples which will negatively impact the emphasis technology companies places on Ireland remains to be seen, though this will be the primary concern of the Irish government. A country which saw felt the brunt of the recession more than most during the 00s can ill-afford another mass exodus to cripple the economy.
Apple will most likely have to repay some of the tax bill, though how much remains to be seen. The Gaggle of Red-tapers may not get anywhere near the €14 billion figure, Telecoms.com is betting Apple lawyers are slightly better than those representing the Gaggle of Red-tapers, though any win could set a precedent which allows bureaucrats with sticky fingers to start poking around in the financial affairs of (apparently) sovereign nations within the EU.
Whether this move will offer the Gaggle of Red-tapers more opportunity to poke it’s nose into national affairs or create more complicated (and sometimes unnecessary) regulations remains to be seen, though with such incidents you can start to see where the rise of Brexit-style support is coming from.
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