Apple may be on hook for $8bn in back taxes

Apple, the world’s largest company, could owe more than $8bn (€7.35bn) in back taxes as a result of a European Commission investigation into its tax policies, according to an analysis by Bloomberg.

Apple, which has said it will appeal an adverse ruling, is being scrutinised by regulators who have accused the iPhone maker of using its Irish subsidiaries to avoid paying taxes on revenue generated outside the US.

The probe dates back to 2014 and a decision could come after the upcoming general election, Finance Minister Michael Noonan said earlier this month.

Brussels contends that Apple’s corporate arrangement in Ireland allows it to calculate profits using more favourable accounting methods. 

While Apple generates about 55% of its revenue outside the US, its foreign tax rate is about 1.8%, according to the analysis.

If the EC decides to enforce a tougher accounting standard, Apple may owe taxes at a 12.5% rate, on $64.1bn profit mae from 2004 to 2012.

Apple is the highest profile case of US companies facing scrutiny from officials in Europe. Starbucks, Amazon, and McDonalds also have had its tax policies questioned.

In October, Apple listed scrutiny of its taxes as a risk factor to investors. 

The US Internal Revenue Service has also examined the company’s tax returns, Apple said. 

If tax rates change, Apple has said its “financial condition, operating results and cash flows could be adversely affected”.

Apple CEO Tim Cook has denied the company uses tricks to avoid paying taxes and branded criticism the company has faced from US lawmakers as “political crap”. 

He said the US tax system is outdated.

Additional reporting by the Irish Examiner


Food news with Joe McNameeThe Menu: Upcoming food highlights

THE health properties of tea have long been advertised. “It maketh the body active and lusty” a 1660 promotion suggested. However, before you dunk your teabag into a mug of steaming water, spare a thought for the environment. Some have polypropylene to help to seal them and it doesn’t decompose.Storm in a teacup: Top 8 loose-leaf teas

Bestselling author Isabel Allende talks to Rowena Walsh about life, grief, and why it’s never too late to fall in loveIsabel Allende: It's never too late to fall in love

Cliffs of Moher Retreat owner Michelle Moroney has written a book on finding self-worth and stepping back from our 24/7 lives. She talks to Marjorie Brennan about the need to unwindMichelle Moroney highlights the need to take stock of our lives

More From The Irish Examiner