Apple closed the deal to pay Ireland over $15 billion in back taxes

400Apple on Monday reached an agreement with the European Union to begin depositing the €13 billion ($15.4 billion) in back taxes it was ordered to pay Ireland last year, following the landmark decision to crackdown on tax shelter policies and profit offshoring, according to The Wall Street Journal.

We have now reached agreement with Apple in relation to the principles and operation of the escrow fund,” Finance Minister Paschal Donohoe told reporters before a meeting with European Competition Commissioner Margrethe Vestager, per Reuters.

"We expect the money will begin to be transmitted into the account from Apple across the first quarter of next year". 

Donohoe said the money is expected to be transferred during the first quarter of 2018, although late last month it was said the collection process would begin in the "coming weeks".

Despite the ruling having been issued more than a year ago, in August of 2016, Ireland has resisted collecting the money. The country strategically uses low tax rates to spur domestic investment from foreign corporations. But the practice has resulted in companies like Apple effectively using Ireland as a tax shelter, paying rates of as little as 0.005 percent on all European profits between the years 2003 and 2014 thanks to subsidiaries and shell companies designed solely to collect and maintain offshore revenue. Apple has long challenged this characterization of its tax schemes, with CEO Tim Cook calling the EU Commissioner’s ruling “total political crap.”

Apple has denied any wrongdoing and has also said that it received no “special deal.” “We have a dedicated team working diligently and expeditiously with Ireland on the process the European Commission has mandated,” Apple said in a Monday statement according to UPI. “We remain confident the General Court of the EU will overturn the Commission’s decision once it has reviewed all the evidence.” Both Apple and Ireland have challenged the EU’s court order.

Along with Apple, companies such as Amazon, Facebook, and Google have come under scrutiny in the last few years for allegedly paying too little tax by establishing shell companies in low or no-tax countries such as Luxembourg and Ireland.

Last month, the European Commission launched a public consultation to help it decide on a fairer and "growth-friendly" tax regime for multinational technology companies operating in the European Union.

The commission said it wanted binding legislative proposals for "unitary tax" that would be levied on a share of tech companies' global profits, divided up between the EU countries where they operate.

In July, the European Parliament passed a directive requiring big multinationals to report tax and financial data separately in all countries where they operate in a bid to tackle tax avoidance and profit shifting to countries with lower tax rates.

However, the requirements need approval from the EU member states, after which they would need to be instituted into national law in each country within a year.

EU countries lose between €50 billion and €70 billion in revenues every year because of tax avoidance, VP of the European Commission Valdis Dombrovskis told lawmakers previously.

The new measure would require firms with activities in the EU and an annual turnover of at least €750 million to disclose data such as profits, revenues, taxes paid, and number of employees for each country where they operate. Currently, multinationals disclose their operations in one consolidated report.


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