Sascha Steinbach, Getty Images
Industryweek 11791 083016 Apple Logo Saschasteinbach
Industryweek 11791 083016 Apple Logo Saschasteinbach
Industryweek 11791 083016 Apple Logo Saschasteinbach
Industryweek 11791 083016 Apple Logo Saschasteinbach
Industryweek 11791 083016 Apple Logo Saschasteinbach

Why Does Ireland Not Want Apple's $14.5 Billion in Back Taxes?

Aug. 30, 2016
Ireland could double its 2015 corporate tax haul in one fell back-tax swoop into Apple’s coffers, but doing that, finance minister Michael Noonan says, “would be like eating the seed potatoes.”

Apple’s billions in back taxes could cover the entire annual Irish health budget, build about 100,000 homes for the poor or pay off a chunk of the nation’s debt. So why doesn’t the government want the money?

Irish Finance Minister Michael Noonan on Tuesday vowed to fight a European Commission ruling that could force the world’s richest company to pay it at least 13 billion euros ($14.49 billion), more than twice the country’s entire 2015 corporate tax take and equivalent to about $3,000 for every man, woman and child. He drew fire from opposition lawmakers who say Dublin should take the money. For the government, though, the stakes are higher.

The country’s corporate tax regime is a cornerstone of its economic policy, attracting Google Inc. and Facebook Inc. to Dublin. Even when Ireland was forced to seek an international bailout six years ago, it resisted pressure to change how it taxes companies. While the Apple ruling doesn’t directly threaten the 12.5% rate, the government has promised to stand by executives it says are helping the economy.

“To do anything else, it would be like eating the seed potatoes,” Noonan told broadcaster RTE on Tuesday, adding a failure to fight the case would hurt future generations.

Apple and Ireland deny any wrongdoing and say no sweetheart deal was ever agreed. The iPhone-maker is one of more than 700 U.S. companies that have units there, employing a combined 140,000 people, according to the American Chamber of Commerce in Ireland.

For Apple, the arrears are a drop in its vast ocean of cash. As of last month, Apple had $232 billion, with about $214 billion of that held overseas. The company generated about $4.45 billion a month last year, so the arrears figure works out to about three months of profit.

“It’s all about our reputation,” said Peter Vale, tax partner at Grant Thornton Ireland in Dublin. “It’s not the number that is a problem per se, it is the implication that Ireland engages in some kind of funny business around tax, the idea that we give special deals and so on.”

The government maintains that even if it were to take the cash, European rules mean it would have to use the money to pay down some of its 180 billion euros ($200.68 billion) of national debt rather than fund spending. Yet, with Ireland’s health service creaking, pressure is beginning to mount for the government to change course. Opposition party Sinn Fein said the government shouldn’t appeal any adverse ruling, saying the idea was “farcical.”

The government “will actively try to avoid recouping tax revenue owed to the Irish people,” Matt Carthy, a Sinn Fein member of the European Parliament said in a statement. “There is no justification to challenge a ruling against this deal, and the government should immediately rule out an appeal.”

By Dara Doyle and Peter Flanagan

Popular Sponsored Recommendations

From Data to Action: Enabling the Connected Enterprise with a Digital Thread

Feb. 8, 2024
Manufacturers are transforming the enterprise with cloud technologies and IoT

Disruptive EV Technologies Are Driving New Supplier Realities

Sept. 20, 2023
Vehicle electrification is upending the automotive landscape, forcing suppliers to make critical strategic and operational decisions. Understand what that means for you in our...

Guide to Dedicated Contract Carriage

May 27, 2022
Is DCC (Dedicated Contact Carriage) right for your business? It could be a way for shippers like you to reduce costs, ensure truck capacity and reduce risk. The more you know ...

Discrete and Process Manufacturing 2024 Trends and Outlook for North America

March 5, 2024
We surveyed over 200 discrete and process manufacturers to give you an idea of what sets thriving manufacturers apart from the rest, as well as which strategies are most effective...

Voice your opinion!

To join the conversation, and become an exclusive member of IndustryWeek, create an account today!