Tax Blog

Apple and the $14 Billion Irish Tax Bill

Apple Incorporated has announced it will appeal the $14 billion recent court decision in Ireland. In the court case, an Irish court ruled that Apple would have to pay nearly $14 billion in taxes to Ireland. The court alluded to the fact that on its US tax return, Apple cites the revenue as being earned in Ireland. Under its Irish tax return, it lists the income as earned elsewhere other than Ireland.

From 1995 through 2015, Apple profited over $200 billion dollars worldwide. The Irish court pointed out that the taxes paid to Ireland were less than 1% of their income in 2014 and 2015. Apple claims this tax strategy is based upon Irish law and was analyzed and created by a leading Irish tax attorney.

Comment: Apple is a worldwide runaway success. Inventor of the iPhone, iPad, iPod, and all other iOS devices, Apple has changed the world. Technology that at one time was limited to the most economically advantaged is now better and enjoyed by the world’s lower economies. These devices along with many other factors have gone far to lift much of the world out of poverty.

Although Apple is headquartered in California, it also has an office in Ireland for tax purposes. Many international companies have offices in foreign locations as part of a tax strategy in order to avoid US taxes. This is legal and expected as part of any international tax strategy. Host countries generally enjoy some tax revenues from their foreign companies for doing essentially nothing. It is generally a win-win for both.

What is unusual here is the host country of Ireland has surprised the world in this tax case and turned on its foreign/hosted company. The detriment to Ireland is that every international company will now think twice before using Ireland as a host country

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