Technology giant Apple’s annual report, filed recently in the United States, ‘indicates a substantial increase in the amount of tax it may be paying in Ireland’, according to the Irish Times. Apple’s accounts for the year ending 30 September 2015 show $47.6bn of its total pre-tax earnings of $72.5bn as from outside the US; and that its effective tax rate increased to 26.4% in 2015 from 26.1% in 2014. Apple stated that ‘the higher effective rate during 2015 compared to 2014 was due primarily to higher foreign taxes’, and that ‘substantially all’ of its non-US profits were generated by Irish subsidiaries.
Meanwhile, the Irish department of finance said that corporation tax receipts had ‘overperformed’. Figures for the year to the end of October 2015 show that CT receipts have reached €4.75bn, about €2bn more than forecast and €1.8bn more than the same period in 2014. On Monday 9 November, Irish finance minister Michael Noonan told reporters he believes the EC will likely announce its decision on whether Apple’s Irish tax rulings constituted illegal state aid by the end of the year.
Apple has already said that if the EC were to conclude against Ireland, ‘it could require Ireland to recover from the company past taxes covering a period of up to 10 years reflective of the disallowed state aid, and such amount could be material’. Pinsent Masons tax partner Heather Self observed: ‘For a US company, a decision that a ruling constitutes state aid could be very expensive. Amounts repaid are repayments of aid and so will not automatically be considered to be “tax” for the purposes of double tax relief. Even if they do qualify for credit, the group’s overall foreign tax credit position may limit the relief available.’
Technology giant Apple’s annual report, filed recently in the United States, ‘indicates a substantial increase in the amount of tax it may be paying in Ireland’, according to the Irish Times. Apple’s accounts for the year ending 30 September 2015 show $47.6bn of its total pre-tax earnings of $72.5bn as from outside the US; and that its effective tax rate increased to 26.4% in 2015 from 26.1% in 2014. Apple stated that ‘the higher effective rate during 2015 compared to 2014 was due primarily to higher foreign taxes’, and that ‘substantially all’ of its non-US profits were generated by Irish subsidiaries.
Meanwhile, the Irish department of finance said that corporation tax receipts had ‘overperformed’. Figures for the year to the end of October 2015 show that CT receipts have reached €4.75bn, about €2bn more than forecast and €1.8bn more than the same period in 2014. On Monday 9 November, Irish finance minister Michael Noonan told reporters he believes the EC will likely announce its decision on whether Apple’s Irish tax rulings constituted illegal state aid by the end of the year.
Apple has already said that if the EC were to conclude against Ireland, ‘it could require Ireland to recover from the company past taxes covering a period of up to 10 years reflective of the disallowed state aid, and such amount could be material’. Pinsent Masons tax partner Heather Self observed: ‘For a US company, a decision that a ruling constitutes state aid could be very expensive. Amounts repaid are repayments of aid and so will not automatically be considered to be “tax” for the purposes of double tax relief. Even if they do qualify for credit, the group’s overall foreign tax credit position may limit the relief available.’
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