For a long time now, Apple has been facing tax related problems in the European countries. Earlier this week, a warning was given by the European Union that the final decision of these taxation issues Apple is facing is being investigated thoroughly and no hasty decision will be taken. Keeping this statement in mind, one can expect a long running process to get stretched longer. The main delay has occurred due to a specific decision which was taken back in December last year.
Although the whole process of the actual investigation is quite slow, there are a number of speculations regarding the whole case. According to some of the more relevant speculations, the previous tax arrangements Apple had with Ireland or the Irish Government can be termed illegal. If this turns out to be so, Apple will face quite a few problems; most significantly, a bill might get issued regarding the amount of illegal unpaid taxes.
When a person purchases an Apple item in Europe, the Apple store there has basically a couple of options. Firstly, they can transfer the amount to the U.S. account Apple has, and thus pay the U.S. government the taxes. Secondly, they can deposit the amount in the U.K. Apple account. In this case, the company has to pay taxes to the U.K. government. In the course of time, it has been seen that none of the above scenarios had taken place.
There are basic two reasons for this. According to the taxation rates, in U.S., one has to pay 35% corporate taxes and in U.K., one has to pay 20%. Thus, it will be much more profitable for Apple to pay their taxes in U.K. On the other hand, Ireland tax rates are much low, amounting to only 12.5%. With an Apple headquarter in Ireland, Apple sends their money to the country.
Moreover, due to the larger companies growing in the country, Ireland creates more job opportunities by allowing the companies to come in. Thus, to attract more companies, Ireland has given an offer of 2.5% tax, although, it is only for the larger more reputed companies. Thus, companies like Apple and Google are paying much less amount (5%) compared to other companies (12.5%).
