Concerns around Apple taxes
November 11, 2016
Let’s understand fiscal relations between Apple and other countries. Apple had to pay Ireland taxes in the amount of 13 billion euro. But the Government of Ireland said that Apple is not in debts and that Apple has to pay nothing. The USA began to criticize position of Ireland because it can raise mistrust concerning relations between the USA and the EU. Why should this situation worry people around the world?
There is a logical explanation of any question. Everything is changed including tax rules and regulations. The European Union always seeks to observe the tax legislation, but in case with Apple there are no violations, Ireland doesn’t require payment of taxes. However the EU insists on a position of absence of “offshore tax havens” in the territory of the EU.
Ireland is considered as a popular country for technological industry just because of friendly corporative taxes and cheap company formation. In fact, the corporate tax rate in Ireland is about 12.5%. However, there are other different conditions exist that could reduce the final tax amount.
De facto, a tax rate for Apple is only around 1%, it is very low rate indeed. Really Apple doesn’t pay direct taxes, but Apple helps the economy of Ireland by other way, by creating a set of jobs. In spite of it, the Government of the European Union considers that Apple has to pay to Ireland about $13 billion euro of taxes.
Even if Apple will pay this amount of taxes, Ireland wouldn’t receive it. This means that the money actually will be transferred to Ireland’s debtors, among them there are a lot of European countries. So, as you can see, the EU cares not so much for Ireland, but for receiving income in any available way.
Many people ask the question why does Ireland refuse taxes?
More than 10 years ago economy of Ireland was very weak in comparison with other European countries. Being an island, Ireland had no comfortable access to continental Europe and had no investors from the US. That’s why Ireland has developed and has practiced the low tax policy directed to business development. And it helped to attract large entrepreneurs who opened their business in Ireland.
Such tax policy had a success and now a lot global firms set up companies in Ireland. For example: Google, Microsoft, Apple and many others. It has led to development of technical progress and to creation a number of jobs. Only Apple has opened about 6000 vacancies in Ireland.
Among other famous companies are Facebook, LinkedIn, and Zendesk who also incorporated in Ireland. If we count in total, these companies have offered about 24000 jobs in Ireland. It means that Ireland had an additional tax income, and investors received profits of about 13 billion pounds.
After that, ecosystems began to appear in Ireland; universities have developed special tech programs to teach highly skilled personnel; the economy has started to rise by wide steps. Many business owners and entrepreneurs have relocated from the EU to Ireland. Nowadays Ireland is one of the most advantageous countries in the world for overseas company registration and even the EU can’t stop the growth of tech progress.