After being told the company owes $14.5 billion in back taxes, Apple’s general counsel says the European Commission has its numbers wrong.
Meaningless and “total political crap.”
That’s how Apple CEO Tim Cook and the company’s top lawyer this week described the European Commission’s reckoning of the taxes the company has paid in Ireland.
In demanding this week that Apple pay $14.5 billion in back taxes, the Commission said the company, which is based in California but has offices in Ireland, paid just 0.005 percent taxes in that country in 2014.
Apple General Counsel Bruce Sewell denied that.
Apple General Counsel Bruce Sewell has a problem with the European Commission’s math.
“We paid tax at the statutory rate of 12.5 percent tax on profits relating to our activities in Ireland,” Sewell told a German publication, the Frankfurter Allgemeine Zeitung, on Friday. “We don’t understand where the Commission’s figures are coming from.”
Sewell said Apple paid $400 million in corporate income taxes in Ireland in 2014. It also paid $400 million in current US corporate taxes on those profits.
“We also accrued several billion in US corporate tax on a deferred basis,” Sewell said. “To get to this meaningless 0.005 percent, the Commission completely ignores the fact that the vast majority of these profits were subject to US taxation.”
Sewell’s remarks came a day after Cook, speaking with the Irish Independent newspaper, called the Commission’s demand for back taxes “total political crap.” On Tuesday, Cook published an open letterto Apple’s European customers, saying that “in Ireland and in every country where we operate, Apple follows the law and we pay all the taxes we owe.”
The Commission believes that Apple — one of the world’s most valuable companies, thanks to demand for the iPhone — made illegal deals with the Irish government. In some years, the Commission says, that agreement let Apple pay next to nothing in taxes on its European business. The claim for $14.5 billion in back taxes takes the past decade into account.
Apple’s chief financial officer, Luca Maestri, also called out the Commission’s 0.005 percent rate, telling Bloomberg News this week that it’s “a completely made-up number.”
Apple had $231.5 billion in cash as of its quarterly earnings report last month. Nearly $215 billion of Apple’s cash is held overseas. Like many other US companies, Apple keeps the majority of its earnings overseas to avoid paying the US’ corporate tax rate of 35 percent on profit. US multinationals have over $2 trillion in offshore earnings that haven’t been repatriated, according to Oxfam American. Cook this week said Apple expects to bring back billions of dollars to the US next year.
Apple is appealing the Commission’s ruling. On Friday, the Irish cabinet agreed to ask the country’s parliament to endorse that appeal.
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