Europe to investigate Apple’s tax affairs

APPLE’S TAX AFFAIRS are to be subject of an extensive formal investigation by the European Commission, competition commissioner Joaquín Almúnia will confirm today.

Last year, the commission began an information gathering exercise into the tax arrangements for multinational companies across several countries, including Ireland.

It follows claims made last year by a US senate committee headed by Carl Levin, which argued that while the business’s corporate structure includes three Ireland-based subsidiaries, they do not appear to by tax-resident anywhere in the world.

One of those subsidiaries, Apple Sales International, recorded pre-tax profits of $22bn (£14.4bn) in 2011, but paid only £10m in tax, equating to a rate of around 0.05%.

While the committee held Apple is “one of the US’s biggest tax avoiders”, it noted the business had not done anything illegal.

The senate added that Ireland’s tax regime essentially made it a tax haven and that it had struck a special deal with Apple, something the Irish government officially rejected.

EU state aid rules are designed to prevent unfair practices, although it is not clear that countries offering favourable tax terms to companies or industries would violate such rules.

When asked about an investigation by the European Commission, Irish prime minister Enda Kenny told broadcaster RTE that overall an international response is required.

He added Ireland had co-operated with the OECD and supported its drive to end global tax arbitrage.