Apple, whose CEO Tim Cook likes to talk a big game about how the tech industry should be more socially responsible while overseeing an international tax-avoidance regime that puts Scrooge McDuck’s gold-filled vault/swimming pool to shame, has agreed to repay Ireland over €12 billion (around £10.8 million) in unpaid taxes, the Wall Street Journal reported.
In 2016, the European Union decided that a sweetheart tax deal in which Apple routed its European profits through Ireland broke the law, saying the arrangement constituted illegal state aid as similar tax rates were not made available to Apple’s competitors.
Both Apple and Ireland dragged their feet on the repayment as they appealed the decision in court. While one might wonder why the Irish government might turn up its nose at nearly £11 billion, by offering annual tax rates as low as 0.005 percent for over a decade, Ireland essentially acted as a tax haven—a status it has used to attract investment and presence by international corporations. For example, a similar deal between Amazon and Luxembourg resulted in the tech giant hiring some 1,500 employees there, simultaneously reducing the tax burden on its European operations by approximately 75 percent.
These international tax havens allow major companies to stash away huge piles of money that would otherwise be taxed in their home countries. Though some governments have responded with the tax holiday workaround—essentially meeting the companies in the middle by offering temporary tax breaks to bring the money home—that’s backfired big time. Such tax holidays seem to have actually encouraged the companies to horde the money overseas until they could use it to finance stock buybacks and huge payouts to corporate executives nearly tax-free.
The situation has gotten tenser in recent years, with EU members’ finance ministers urging adjustments to the law that could jack up multinationals’ tax burdens.
Apple’s agreement on Monday has set the wheels in motion for the money to actually be delivered, with Irish officials saying they expected the first payments to be processed in early 2018. Per the Journal, the European Commission says it will not close court proceedings against Ireland until all of the money is transferred.
Apple insists it did nothing wrong and that eventually, its Irish treasure horde will be returned to Cook and crew.
“We have a dedicated team working diligently and expeditiously with Ireland on the process the European Commission has mandated,” the company told the Journal in a statement. “We remain confident the General Court of the EU will overturn the Commission’s decision once it has reviewed all the evidence.” [Wall Street Journal]