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September 1, 2016

Apple’s Cook tells of company outrage at EC ruling and challenges tax figures

News: US backs Apple – are lines being drawn?

By Alexander Sword

Apple CEO Tim Cook has issued a scathing critique of the European Commission’s ruling on Apple’s tax activities in Ireland, calling it “total political crap.”

Entering into an increasingly fraught debate, Cook told Irish National Broadcaster RTE in his first broadcast interview that the finding was “wrong-headed” and that the decision was ‘maddening.’ He said that he was very confident that the “unjust ruling” would be overturned.

Mr Cook told RTE that the Commission's claim that "Ireland's selective treatment of Apple allowed the company to pay an effective tax rate of 0.005 percent on its European profits in 2014" was an untrue figure and that the company paid "a worldwide income tax rate" of 26.1 percent that year.

He added that $1 out of every $15 paid in corporate tax in Ireland in 2014 was paid by Apple, making it the biggest taxpayer in the country that year.

“We actually went into Ireland in 1980. We didn’t go there to seek advantage on taxes. We only had 60 employees and very little revenue.”

Cook said repeatedly that the company was in Ireland due to the people, likening the company’s relationship with the country to a “37-year marriage”.

Cook said categorically that there had been no exclusive tax deals between Apple and Ireland.

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“We haven’t done anything wrong and the Irish government hasn’t done anything wrong.”

He said that the company had complied with Ireland’s tax laws, paying the statutory rate of 12.5 percent.

“It’s maddening, it’s disappointing. It’s clear that this comes from a political place. It has no basis in fact or law.”

Ireland was instructed by the European Commission to recover up to €13bn of alleged state aid from the company over a ten year period.

EU state aid rules prohibit member states from providing impermissible aid to companies, which includes in the form of improper tax benefits.

Apple is being supported in its opposition to the ruling by the US Treasury.

A spokesperson told Bloomberg in a statement: 'We believe that retroactive tax assessments by the commission are unfair, contrary to well-established legal principles, and call into question the tax rules of individual Member States.

'The commission's actions could threaten to undermine foreign investment, the business climate in Europe, and the important spirit of economic partnership between the US and the EU.'

In August, the US Treasury issued an implicit warning to EU tax authorities over its State aid investigations that could have major implications for tech giants such as Google.

In a new white paper, the Treasury claimed that the European Commission’s investigations risked turning it into a “supra-national tax authority”.

While stating that multinational tax avoidance is a “serious concern” for the US, the Treasury stated that initiatives to cut down on it such as the Base Erosion and Profit Shifting (BEPS) project were being undermined by EU activities.

The case has led to reports of a potential tit for tat retaliation between the US and EU though these fears have been dismissed by at least one commentator as ‘crazy talk’, according to a Reuters article.

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