EU to launch probe into Apple's Irish tax deal - report

DUBLIN Wed Jun 11, 2014 2:53am IST

The Apple logo is pictured at a retail store in the Marina neighborhood in San Francisco. REUTERS/Robert Galbraith

The Apple logo is pictured at a retail store in the Marina neighborhood in San Francisco.

Credit: Reuters/Robert Galbraith

Related Topics

Stocks

   

DUBLIN (Reuters) - The European Commission will launch a formal investigation on Wednesday into Apple Inc's (AAPL.O) tax arrangements in Ireland, Irish state broadcaster RTE reported, without naming its source.

The EU's competition authority said last year that it was looking into corporate tax arrangements in several member states and had requested information from Ireland.

Antoine Colombani, a spokesman for competition issues at the Commission, declined to comment on the RTE report. Ireland's finance ministry said it had not been informed of any investigation.

Irish Prime Minister Enda Kenny declined to comment on whether the Commission might be preparing to open an investigation but said he was confident of the legality of Ireland's tax system.

"We believe that our legislation ... is very strong and ethically implemented and we will defend that very robustly," Kenny told journalists in Dublin.

A U.S. Senate subcommittee investigation revealed last year that Apple had cut billions from its tax bill by declaring companies registered in the Irish city of Cork as not tax resident in any country.

Senator Carl Levin, chairman of the subcommittee, said the Apple structure represented "the Holy Grail of tax avoidance."

Apple in the United States entered into deals with the Irish subsidiaries whereby the Irish units received the rights to certain intellectual property that were subsequently licensed to other group companies, helping ensure almost no tax was reported in countries such as Britain or France.

Apple's Irish arrangement helped it achieve an effective tax rate of just 3.7 percent on its non-U.S. income last year, its annual report shows – a fraction of the prevailing rates in its main overseas markets.

The focus of the investigation will likely be tax regimes that are favourable to certain companies, including Apple, rather than the companies themselves. Technology companies such as Google Inc (GOOGL.O) and Microsoft Corp (MSFT.O) have cut their overseas tax rates to single digits by establishing Dublin-registered subsidiaries, which they have designated as tax resident in Bermuda.

An Apple representative had no comment. The company has previously said it complied with the law. "We pay all the taxes we owe - every single dollar," Apple Chief Executive Tim Cook testified to U.S. Senate committee investigators last year.

Apple shares ended up 0.6 percent at $94.25 on the Nasdaq on Tuesday. Analysts say that the investigation is unlikely to have a major impact on Apple's share price.

Piper Jaffray analyst Gene Munster said investors are currently "hyper-focused" on new product speculation.

"I don't think it will be a problem unless Apple did something illegal," said Munster.

(Reporting by Conor Humphries; Additional reporting by Barbara Lewis in Brussels and Christina Farr in San Francisco and; Editing by Louise Heavens and David Evans)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

Wipro Results

People walk in the Wipro campus in Bangalore June 23, 2009. REUTERS/Punit Paranjpe/Files

Wipro sees rosier end to year as U.S. clients spend

India's third-biggest software services firm Wipro Ltd , under pressure to improve lacklustre sales growth, said it saw a rosier end to the year as more confident U.S. clients increase spending.  Full Article 

Reuters Showcase

New Email Service

New Email Service

Google launches new email service dubbed "Inbox".  Full Article 

Apple-1 Auction

Apple-1 Auction

Early Apple computer sells for $905,000 at auction.  Full Article 

No More Nokia

No More Nokia

Microsoft looks set to drop Nokia name from smartphones.  Full Article 

User Data Security

User Data Security

Apple CEO discusses security with top Chinese official amid hacking claims - Xinhua.  Full Article 

Patent Wars

Patent Wars

Big Tech winning battle with 'patent trolls'.  Full Article 

Record Season

Record Season

FedEx expects record peak volume of 22.6 million packages on Dec. 15.  Full Article 

Yahoo Earnings

Yahoo Earnings

Yahoo ekes out Q3 revenue gain despite display ad weakness.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage