The European Commission will officially look into Apple’s tax arrangements with Ireland, the Irish state broadcaster RTE has learned. The official announcement is expected to be made tomorrow. It comes after Apple spent the majority of 2013 in the hot seat over its tax practices and closed that chapter thanks to an SEC investigation in October concluding that Apple did not seek the holy grail of tax avoidance.
Last year, Reuters reported that Apple was operating almost tax free (2% tax) in Ireland for the first ten years, as it opened up offices in the country during its bleakest times. A US Senate committee investigation uncovered the scenario Apple used to cut billions from its tax bill and concluded that Apple sought the “Holy Grail of tax avoidance.”
Despite being cleared of these allegations, the case has drawn attention to tax loopholes of EU states that big tech companies such as Apple, Google, Adobe, and others used to cut corners. The head of Competition Policy at the European Commission, Joaquin Alumnia, said that he will investigate the issue.
The Irish government is firm in its position, and during a visit to California, Taoiseach Enda Kenny said that the Government is ready to defend the country’s tax regime. He said this during a meeting with Tim Cook and other Apple senior executives.
“We believe that our legislation is robust, that the application of that legislation is ethical and we will be prepared to defend that very strongly in the event of any further statement or requirement from the European Commission,” Mr Kenny told reporters at the global head office of computer maker Hewlett Packard in Palo Alto.
On the other hand, there is California governor Jerry Brown, who expressed his belief that Ireland has attracted Apple with “creative accounting.”
“I don’t know how you got to have Apple to have so much of their business in Ireland. We thought they were a California company but when you look at their tax return, they are really an Irish company,” he said, to laughter from the audience at the event in San Francisco.
“Anyway that is part of the creativity – yeah, it is called creative accounting. Anyway, I won’t go there,” said the politician who is running for a fourth term as governor this year.
The formal investigation is yet to be announced, but it was preceded by multiple “worrying” reports about a possible probe.