Update: Apple’s Irish Strategy to Avoid Paying Taxes

Updated April 15, 2018-

In taking advantage of the Trump tax-reform law, Apple says it will bring back most of its $252 billion in cash it’s been hoarding abroad, and make a big investment in the U.S.

This means Apple is making a one-time $38 billion payment to the U.S. for the repatriated cash while taking advantage of the new 25.7 percent corporate tax rate.

Meantime, Goldman Sachs, Amundi SA and BlackRock are ostensibly managing about 13 billion euros ($16 billion) in the back taxes Apple will likely have to pay to Ireland.

This, in the wake of the European Commission’s Aug. 2016 ruling that Ireland had granted unfair deals to Apple. While Apple and Ireland appeal the decision, the commission demanded Ireland hold the money in escrow. The appeal may take as long as five years.

The commission sued Ireland last October for failing to collect the taxes. The money, which was initially due Jan. 3, 2017, is being collected in Q2 this year.

So, Apple’s strategy to avoid paying taxes in the U.S. has ostensibly backfired in the wake of the European Commission’s €13bn tax assessment.

The tech company has received massive Irish tax benefits, which the commission ruled is illegal. By sheltering profits in Ireland, Apple has also avoided paying U.S. taxes.

Ireland allowed Apple to pay 1 percent in taxes – significantly less than other companies.

Apple and Ireland say they’re appealing the ruling.

The most nonsensical irony in corporate America involved Apple CEO Tim Cook’s tax strategy which drew fire from the European Commission. Why? It’s apparently backfiring.

Why? It’s unpatriotic and shortsighted. Apple and others haven’t been paying their fair share to the U.S. treasury.

They disingenuously avoided paying America’s 35 percent corporate tax rate while being heavy donors to Democrats.

Mr. Cook’s tax philosophy was illustrated in a far-reaching interview published in the Washington Post.

“The tax law right now says we can keep that [profit] in Ireland or we can bring it back,” Mr. Cook told the newspaper.

While capitalizing on a mega tax loophole, such CEOs opposed the candidacy of Donald Trump, who campaigned on dramatically lowering the onerously high tax rate to a low 15-percent rate.

He has also lamented the the nation’s $21-trillion debt and failing infrastructure such as roads, bridges and airports.

Mr. Trump has blasted Apple for outsourcing jobs and inversions to shelter its income.

While complaining about high taxes, CEOs like Mr. Cook favored Hillary Clinton who famously wanted to split up the economic pie in income redistribution while hiking taxes even higher.

Apple has about $292 billion in cash, so it’s very strange fiscal thinking.

Conversely, Mr. Trump’s plan revised the tax code to make it possible for corporations to keep most of their money and incentivizing them into hiring more employees. 

Having faced mounting criticism for taking its American profits overseas, the tax-dodging CEO said he won’t bring his company’s money back to the U.S. until there’s a “fair rate.”

Other critics of Mr. Cook’s strategy said he’s been guilty of unpatriotic behavior.

“It is the current tax law. It’s not a matter of being patriotic or not patriotic,” Mr. Cook was quoted as saying.

Poised to take a bite out of Apple is the European Union. Ireland has prospered with its tax code – the lowest in the EU.

But EU officials want a piece of the action and are strategizing to penalize such companies for more tax revenue.

Apple isn’t the only global American company to capitalize on Ireland’s tax code. Many others are, too.

The moral:

It is a matter of patriotism to pay American taxes, eliminate the nation’s $21-trillion debt, rebuild the nation’s infrastructure and to create family wage jobs.

Plus, by evading America’s tax structure – assuming the EU prevails – Apple and other companies will eventually pay a higher price for sheltering their American profits in Ireland.

From the Coach’s Corner, here are editor’s picks:

How CEOs, Taxes and Policymakers Fail the U.S. — Like it or not in President Obama’s second term, stagnant growth means there’s still the possibility of a double-dip recession. We’re in a precarious position, largely, because businesspeople and consumers lack confidence in the economy – for good reasons.

How Not to Fear an IRS Audit – 6 Tips — The key to dealing with an IRS audit is to have done your homework. If you do all your homework, you don’t have to fear an audit.

Ideas to Accelerate Slowest Economic Recovery in Decades — Most voters are likely to vote their pocketbooks. So for them the positive spin on the economy by Hillary Clinton and President Barack Obama doesn’t reflect reality.

Governments – from Cities to Federal – Dangerously in Debt — The U.S. economy has been slowly mending. However, the situation is bleak for governments at all levels. Why? High debt is dangerous and economic growth is dreadfully slow. This is best illustrated by the enclosed U.S. Debt Clock.

‘Dirty Little Secrets’ Trump Hasn’t Told You about Economy — Donald Trump has pushed the envelope to say the least. Many businesspeople get it. So do entrepreneurs, and millions of different demographics of voters who are angry at the economic decline of America.

Academic Study: Rich Pay More than Their Share in Taxes — The 2016 study by the National Center for Policy Analysis reveals the current tax code is highly progressive. It’s entitled, “U.S. Inequality, Fiscal Progressivity, and Work Disincentives: An Intragenerational Accounting.”

“We shall tax and tax, and spend and spend, and elect and elect.”

-Harry Hopkins


Author Terry Corbell has written innumerable online business-enhancement articles, and is a business-performance consultant and profit professional. Click here to see his management services. For a complimentary chat about your business situation or to schedule him as a speaker, consultant or author, please contact Terry.

European Commission Promises to Help SMEs on Onerous Laws

After identifying European Union laws that hinder small and medium-sized enterprises (SMEs), the European Commission promises numerous fixes. The commission has been reviewing what it calls the most irrelevant or oppressive laws with which SMEs having been coping.

“The Commission is making sure that EU legislation is fit for purpose and helps European businesses to grow and to create jobs,” said European Commission President José Manuel Barroso in mid-March 2013.

“This is why we have put smart regulation at the heart of our policy-making,” he added. “And this is why we want to ease the lives of our small and medium sized enterprises, which are most important engines for Europe’s economy.”

Port workersImage source: © European Union

The commission is the executive body of the EU, and is comprised of a representative from each of the 27 member countries.

The commission launched a program in December 2012 that it calls REFIT, or Regulatory Fitness and Performance Program. Recommendations to solve the burdensome laws – either in more study or legislative amendments – are due June 2013.

Proposed fixes include:

REACH – Registration, Evaluation, Authorization and Restriction of Chemicals. More than 1600 businesses commented for the study, which concluded that REACH works as designed. The law will stay in place. But SMEs are disproportionately burdened and the commission expects to make recommendations.

VAT – Value added taxes. The commission won’t propose elimination of VAT, but like REACH, it promises to simplify the law for SMEs. For example, this is likely to include standardized forms for inter-country business and a VAT Web portal.

Product Safety and Market Surveillance Package. It’s hoped that lucid rules will decrease costs for SMEs to comply with the law and sell more products throughout the EU marketplace. The Commission promises “special guidance and information” for businesses on the changes via EEN, the European Enterprise Network.

The commission will also underwrite law enforcement of product safety.

European professional card. To enhance mobility of workers throughout the EU, the commission introduced the idea of a professional card. It’s currently being discussed in Parliament.

Waste shipments. The commission is reviewing waste policy. This includes hazardous waste and plastics.

Labor market – worker health and safety. Launched in 2012, the review of worker health and safety is expected to be completed by 2015.

Data protection. Companies with fewer than 250 employees will not be required to hire a data protection officer or undergo “data protection impact assessments” – as long as the companies’ mission isn’t data processing.

Recording equipment in road transport – for driving and rest periods. SMEs wouldn’t be required to install a tachograph on their vehicles if they drive within a radius of 100 km. Parliament is reviewing the proposal.

Awarding of public supply and service contracts. SMEs would supposedly benefit under simplified procedures for the awarding of public contracts. Parliament is considering the proposals now.

These sound like good ideas. Let’s hope the European Commission keeps this philosophy going.

From the Coach’s Corner, additional reading:

“Regulations grow at the same rate as weeds.”
-Norman Ralph Augustine


Author Terry Corbell has written innumerable online business-enhancement articles, and is a business-performance consultant and profit professional. Click here to see his management services. For a complimentary chat about your business situation or to schedule him as a speaker, consultant or author, please contact Terry.

Seattle business consultant Terry Corbell provides high-performance management services and strategies.