This week, the European Union (E.U.) ordered Ireland to collect $14.5 billion in unpaid taxes from Apple. According to Margrethe Vestager, the European Union’s commissioner for competition, Apple’s illegal deals with the Irish government allowed the company to funnel profit from two Irish subsidiaries to a “head office” with “no employees, no premises, no real activities,” according to Ms. Vestager.
1. How many years of back taxes is the E.U. requesting and what amount is this?
2. What percentage of Apple’s total cash pile is this back tax request?
3. Why is this seen as jeopardizing the economic partnership between the U.S. and the E.U.?
4. What other companies has Ms. Vestager gone after for tax avoidance? Discuss the details.
5. What are some of the reasons that Apple gravitated toward Ireland for its tax issues?
Kanter, J. and M. Scott. (2016). Apple Owes $14.5 Billion in Back Taxes to Ireland, E.U. Says. The New York Times, August 30 (Retrievable online at http://www.nytimes.com/2016/08/31/technology/apple-tax-eu-ireland.html)