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EU tax bruising for Apple

Tuesday, September 30, 2014 - 02:14

The European Union has accused Ireland of giving Apple Inc. illegal state aid through tax arrangements. David Pollard asks if the ruling willl have any impact on the tech giant or other major corporates.

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Apple's been the pick of the barrel for consumer technology. Is it now facing a massive bill for back taxes - and - so soon after ''bendgate'' - another dent to its reputation? At the centre of those questions: whether Ireland gave Apple special tax deals. Tom Bergin is following the story for Reuters. SOUNDBITE (English) TOM BERGIN, EUROPEAN CORPORATE STRATEGY CORRESPONDENT, REUTERS: ''Apple has managed in recent years to have a tax rate on its overseas income - and that's about sort of 60 per cent of its total income - a tax rate of about two per cent. So if you went from two per cent up to even Ireland's headline rate of 10 percent, you're talking about many billions of dollars. So in terms of actually earnings per share for Apple investors and for, you know, earnings for the company, the impact here could be not insignificant at all.'' Both Apple and the Irish government deny anything untoward. The European Commission launched an inquiry in June - following one by the US Senate. Competition Commissioner, Joaquin Almunia, has given more details on the reasons why. SOUNDBITE (English) TOM BERGIN, EUROPEAN CORPORATE STRATEGY CORRESPONDENT, REUTERS: ''Now we're seeing the basis of why the EU suspects there was some inappropriate activities. So we're seeing specifically areas like whereby people denied there was any link between tax treatment and jobs. We're seeing the EU has got information from Ireland which show both these matters were discussed in the same meeting between tax officials and Apple representatives.'' Ireland could come under EU pressure to ease back on its light-touch tax regime. And it's another headache for Apple chief Tim Cook after this month's launch of the iPhone 6 was marred by complaints over its structural strength. SOUNDBITE (English) TOM BERGIN, EUROPEAN CORPORATE STRATEGY CORRESPONDENT, REUTERS: ''Certainly to be hip and cool and to be portrayed as being a tax dodger doesn't exactly sort of fit very well together, so the company won't be happy about the way that it's being portrayed in the media today.'' Fans of benign tax regimes like Ireland's say they bring in investment and jobs. Critics say they deny other countries tax revenues. Starbucks and a Fiat subsidiary are facing similar inquiries in the Netherlands and Luxembourg. But of the three, a company where image is such a big part of the appeal may hurt the most.

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EU tax bruising for Apple

Tuesday, September 30, 2014 - 02:14