Big $13 Billion Tax Bite Shakes Apple To The Core

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Written By Mohsen Salami

The row over how much tax technology giant Apple should pay to the Irish government has triggered a new argument about sovereignty and a government’s right to set taxes within the European.

One of the main arguments during the Brexit debate was leaving the EU would allow the British government to wrest back the right to make decisions from Eurocrats.

The squabbling over the Apple tax bill strikes at who has the right to make laws in the EU – the Europe or a national government.

To recap, the European Commission has ordered Apple to pay £11 billion in business tax and interest for late payments.

The commissioners argue that the Dublin government allowed Apple an unfair advantage to set up a base in Ireland by doing a deal that saw the firm pay a corporate tax rate of no more than 1% when thousands of other businesses had to pay at 12.5%.

As a result, Apple has created 6,000 jobs in Ireland while paying little tax.

Anger over European cash grab

Both Apple and the Irish government have appealed the ruling.

Apple says the commission is rewriting tax law and putting jobs at risk while claiming to have done nothing wrong.

The government is angry because the decision takes away the national right to set taxes and injects uncertainty into deals between the state and businesses.

The US Treasury has stepped into the row taking the side of Apple and the government, claiming the ruling unfairly picks on the company.

The commission retorts that the ruling only seeks to make the corporate playing field fair for all businesses in Europe.

Do voters want a federal Europe?

Rumblings protesting about the cash mountain built by Apple in recent years have come to a head with the ruling. The company makes profits of $53 billion a year but pays little or no tax in many locations worldwide even though the bulk of sales are generated outside the US.

The money the commission wants to collect is significant – the annual budget for the Irish national health service is $13 billion or equal to the amount on the tax demand going out to the company.

The argument is also reigniting the issues that led to Brexit and undermines the internal structure of the EU.

The vision is for a federal Europe with no national borders, the right for citizens to freely move between member states and for a single market.

The question is whether voters within the EU really want to see that vision crystallise into a federal state of Europe while threatening to disenfranchise their right to national government?