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Apple faces £1.5bn bill if found guilty of tax avoidance

Kit Klarenberg
Written By:
Kit Klarenberg
Posted:
Updated:
01/05/2015

It has been announced that Apple will face a £1.5billion bill if found guilty of pan-European tax avoidance.

The global tech behemoth is currently being investigated by the European Commission over its tax arrangements with the Irish government, which have been dubbed ‘sweetheart’ deals in some quarters. If the arrangements are found to constitute tax avoidance, Brussels can order the Irish government to reclaim any unpaid taxes from the company – and receipts could amount to as much as £1.5bn.

Last June, the European Commission instigated a formal investigation of Apple last June, as it felt that Dublin had granted the firm “selective” tax advantages in two separate deals, inked in 1991 and 2007. Apple commented a the time that the allegations were “without merit”, and Irish Minister for Finance Michael Noonan said last November that the Commission had no case, but the inquiry has proceeded regardless.

However, Apple now appears to acknowledge that finding against the company is possible – in a statement released to the US Stock Exchange, the company stated that if successful, the Irish government would be obliged to recoup past taxes “covering a period of up to ten years”, and such an amount “could be material” (‘material’ meaning 5 per cent of a company’s average profits over the last three years).

Whether a finding against Apple would negatively impact the company’s finances or share price, however, is questionable; today, the company’s stock market value hovers at around $500bn, and it generated £8.9bn in profit in the first quarter of this year alone.

The European Commission Directorate General for Competition will issue a final report this June.

 


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