Some people believe that the Brexit means we don’t have to hear anything about the European Union ever again. This, of course, comes from the widespread misbelief that the outcome of the vote would have been put into effect immediately. Indeed, it looks like we’re going to have at least three more years of direct dealings with the EU. And the EU have just hit British corporate news in a pretty big way.
Back in 2014, the EU began three investigations. These would be in-depth investigations into three companies. Apple, Starbucks, and Fiat Finance and Trade. The aim: to find out whether or not tax authorities in Ireland, The Netherlands, and Luxembourg comply with EU laws when it comes to state aid.
At the time of writing, on August 30th, the EU have come back with some worrying results. It has ruled that Ireland tax offices have been blessing Apple with what some would call a sweetheart tax. Between 1991 and 2015, Ireland’s tax offices had allow Apple to attribute their EU sales to a head office that never existed. It only ever existed on paper. Such an abstract head office could not possibly have generated the amount of profit that Apple had been making during that time. And, as I’m sure you’re aware, Apple made a lot of profit in those twenty-three years.
If ever businesses have gotten a reminder that they should seek help with their taxes, such as from CCH and VAT consultancy services, this is it. Because the amount of tax that Apple is now deemed to owe is staggering, to say the least. The EU have ordered Apple to pay around £11 billion in back taxes to Ireland. The state aid they received has been deemed to be illegal.
People complain every day about the fact that governments allow large companies to get away with tax avoidance. It’s been clear for some time that extremely rich individuals and corporations have easy means to avoid tax payments. Many have accused government tax offices of taking part in such activity. If ever they needed proof, here it is.
That such a ruling has been placed on one of the world’s biggest companies is significant. It’s not exactly been a secret that Apple haven’t behaved all that well when it comes to tax. Even its co-founder, Steve Wozniak, recently stated that the company should be paying more tax. With this ruling, it’s feasible that tax transparency will have to increase for larger corporations. This could help smaller businesses quite a lot in the long run.
Those who have claimed that the EU has no reason to investigate the affairs of multinational corporations? They’ve been proven wrong. The protests of many who believe in the injustice of our current taxing system have been vindicated. I’m not the biggest fan of the EU, but this is one finding I’m glad they have made.
But who knows how many more tax avoidance schemes will be put into place by British governments once the EU are no longer around to keep an eye on things?