Do you want 100 billion?

If you were given 100 billion, would you take it?

I don’t know if you want it or not. I know the Irish government doesn’t want it. Where does this money come from? Apple owes Irish government taxes from EU ruling.

But why doesn’t the Irish government want it? Let’s analyze the reasons today.

This matter started last year. According to reports, the European Commission ruled at the end of August last year that Apple illegally evaded taxes in Ireland. After the EU ruling, a spokesman for the U.S. Treasury Department said the U.S. government believed its companies were being targeted by the EU and warned that the move could undermine U.S. investment in Europe and undermine "the important spirit of the economic partnership between the United States and the European Union."< /p>

Ireland also does not like the EU's ruling and believes that this move violates the country's sovereignty. They said Apple had paid them the taxes they should have paid.

Apple CEO Tim Cook responded in an open letter, saying, “The EU’s move to recklessly replace the member states’ own laws with self-righteous laws is probably not a good thing for others and itself. Ireland has stated that it will appeal the verdict, and so does Apple. We believe that the inappropriate verdict will eventually be withdrawn." Statistics show that Apple's employees in Ireland only account for the total number of employees in the world. 4%, but in recent years Apple has generated two-thirds of Apple's total revenue in Ireland, that is, 65% of revenue has been generated in Ireland.

It is reported that in order to "attract investment", the Irish government has reduced its corporate income tax to 12.5%, and granted lower tax rates or even tax exemptions to specific income from specific countries and regions. This preference makes The actual tax burden of multinational enterprises with branches and subsidiaries in Ireland is much lower than that of the United States and other EU countries.

The EU Competition Commissioner said: "Ireland promised Apple a tax reduction policy. This selective tax policy reduced Apple's effective corporate tax from 1% in 2003 to 0.005% in 2014." Also That is to say, in 2014, Apple paid only $50 in taxes for every $1 million in profits made outside the United States.

With Ireland’s special tax arrangements, Apple has established two Irish subsidiaries: Apple International Sales Company and Apple European Operations Company. Under this structure, ASI is responsible for the sales of Apple products in Europe, the Middle East, Africa, India, and the Asia-Pacific region.

Ireland's special tax arrangement allowed Apple to transfer the majority of ASI's profits to a "headquarters" that was not located in Ireland or any other country, which was considered a "headquarters" under Irish law at the time. A stateless company" and therefore not subject to Irish tax. Ultimately, Apple will only have to pay tax to Ireland on a small portion of ASI's profits.

As a result, only a small portion of Apple’s EU sales are taxed in Ireland, leaving Apple with a tax rate of less than 1%. At the same time, Apple's subsidiary in Ireland pays huge R&D expenses to its parent company in the United States every year. For example, in 2011, Apple International Sales achieved a profit of 16 billion euros. The profits allocated to its Irish subsidiary were less than 50 million euros, and the remaining shares were distributed to the "head office" with tax-free status.

The European Commission said that Apple’s European operating companies also adopted similar settings. But this model does fit in with the Irish government's plans.

Because Ireland’s corporate tax rate is among the lowest in Europe. Not just Apple, Google, Facebook, eBay and Twitter have all set up European headquarters in Ireland. EU officials said the Irish model gave Apple a huge financial advantage and constituted illegal state subsidies.

In response to Apple’s non-payment of taxes, an activist group held a series of protests at Apple’s French retail stores on Saturday, calling on Apple to pay back taxes to the Irish government as required by the European Commission. .

About 100 activists from the Association for a Financial Transaction Tax to Assist Citizens occupied the Apple Place Opera store in Paris. They pushed past security personnel and set up signs, including protest signs left on the equipment. One banner read by protesters read: "We will not stop until Apple pays back taxes." Some activists also handcuffed themselves to the fence and waited for the police to arrive.

Security teams evacuated Apple employees from the building.

The protest lasted three hours, and ATTAC said it planned to meet with Apple representatives later in the day.

For years, Ireland's tax loopholes have allowed Apple to move billions of dollars in international revenue to Ireland, paying a very low tax rate - only 0.005% in 2014. Apple and the Irish government denied any wrongdoing, but the European Commission issued an investigation conclusion last year that the Irish government violated EU law by expanding its state subsidy preferential policy.

Apple is currently appealing the European Commission's ruling, but ATTAC requires Apple to withdraw its appeal to the European Court of Justice and criticizes Apple suppliers' workers for illegal overtime and pollution caused by material extraction.

The Irish government has been slow to collect back taxes from Apple. To this end, the European Commission has taken the Irish government to court, aiming to pressure the Irish government to speed up the process and may fine it.

Why do we have to collect this tax?

Ireland is a member of the European Union, and the EU implements a single market policy among member states. Companies in the EU, no matter which country they are in, can export goods and services to other EU countries without any restrictions. The so-called single market means that many management regulations and important government functions operate at the EU level, and the permanent European Commission institutions in Brussels are responsible for implementation. However, taxation within the EU is handled by each member state, and corporate income tax policies vary widely among member states.

Many multinational companies take advantage of the EU's unified market but non-uniform taxation characteristics to maximize their profits and have set up their EU headquarters in Ireland, where the corporate income tax rate is relatively low, to legally avoid taxes.

Their usual approach is to headquarter the company in Ireland. With the help of some senior lawyers and accountants, they can ensure that even if most of the company's sales markets are concentrated in Germany, France, Italy and Spain, Most of the income will be shown in the accounts as occurring in Ireland, thereby enjoying Ireland's lower tax rate.

The picture above is from 2015. Please remember to exclude the UK because the UK has left the EU.

EU authorities believe that Ireland’s tax problem may be far more serious than imagined, similar to the tax transactions between Amazon and Luxembourg and Starbucks and the Dutch government. The above two transaction events have challenged the EU's tax policy.

The real story is this, Apple and Ireland (or Amazon and Luxembourg, Starbucks and the Netherlands) reached an arrangement regarding taxes. Under this arrangement, Apple agreed to deliver a certain amount of funds to Ireland, which will treat Apple as having fulfilled its tax obligations in the EU. The result of this is that Ireland has increased taxes, and Apple has paid more on the surface, but it no longer has to pay taxes to other EU countries.

Why doesn’t the Irish government want this money?

You have to know that the low tax rate is suitable for attracting investment. How many high-end and sophisticated companies will be willing to open branches here, and how much economy will it drive? Employment is guaranteed, everyone has money to spend, and the government is happy.

Although this country is small, those foreign company headquarters do not actually employ many Irish people, and the business volume in Ireland only accounts for a small part of the total business volume, but this money is of great significance to this small country. But it is a considerable income.

You have to know that Apple supports a lot of people, and it is relatively generous. In the 30 years since Apple entered China, it has created 5 million jobs in China, and 1.8 million Chinese developers have earned a total revenue of 112 billion yuan through the App Store, the most in the world.

If every company later has to make up for the small amount of taxes like Apple, who will give priority to opening a company here in the future?

However, in the end Ireland still failed to twist the EU's thigh.

Ireland Finance Minister Paschal Donohoe revealed today that Apple will pay back taxes, amounting to approximately RMB 102 billion, starting in the first quarter of next year.

The minister said: "We have reached an agreement with Apple. The funds are expected to be transferred to an escrow account in the first quarter of next year."

In August 2016, the European Commission ruled that Apple illegally evaded $15.3 billion in taxes in Ireland, and Apple must return this tax to the Irish government.

Apple was supposed to start paying back taxes to Ireland in January this year, but it has been delayed to this day as both parties appealed the ruling and because Ireland did not have an account to host this special tax.