Apple embarks on EU court battle over $14 billion tax bill

Apple CEO Tim Cook poses for a selfie during an Apple product launch event at Apple's headquarters in Cupertino, California on September 10, 2019. ( AFP / Josh Edelson)
Updated 17 September 2019

Apple embarks on EU court battle over $14 billion tax bill

  • The EU accuses Apple of parking untaxed revenue earned in Europe, Africa, the Middle East and India, in Ireland,
  • Apple fiercely denies the tax bill. The US government also insists the order by Brussels constitutes a major breach of international tax law

LUXEMBOURG: Apple embarks on an epic court battle with the EU on Tuesday, fighting the commission’s landmark order that the iPhone-maker reimburse Ireland €13 billion ($14 billion) in back taxes.
Lawyers for the world’s biggest company will face EU officials in a Luxembourg court, challenging a decision that CEO Tim Cook slammed at the time as “total political crap.”
The European Commission’s conclusion was delivered in August 2016 by Competition Commissioner Margrethe Vestager, a shock decision that put Europe at the forefront of an emerging effort to rein in the power of US big tech.
The two days of hearings on Tuesday and Wednesday will take place at the EU’s lower General Court, where judges will give their judgment no earlier than 2020.
Any appeal would then go the EU’s highest court, the European Court of Justice, for a final decision that could land as late as 2021.
The EU accuses Apple of parking untaxed revenue earned in Europe, Africa, the Middle East and India, in Ireland, which has emerged as a European hub for big tech and global pharma giants.
This privilege allegedly gave Apple an advantage over other companies, allowing it to avoid taxes between 2003 and 2014 of around 13 billion euros which, according to Brussels, constituted illegal “state aid” by Ireland.
Apple fiercely denies the tax bill. The US government also insists the order by Brussels constitutes a major breach of international tax law.
“The European Commission has tried to rewrite Apple’s history in Europe, to ignore Ireland’s tax laws and, in doing so, to disrupt the international tax system,” Tim Cook said in an open letter in 2016.
The group insists that it is in the United States, where the company invests in research and development and thus creates wealth, that it must pay taxes on the revenue in question.
This became possible after a major tax overhaul in the US at the end of 2017 that allowed Apple to repatriate profits made abroad. Apple has promised to pay Washington a tax bill of $37 billion, in addition to the taxes already paid in the United States.
The California-based giant is supported in its fight by Ireland which has also appealed, refusing to be singled out as a tax haven.
“We will present a very strong case,” promised Irish Finance Minister Paschal Donohoe on Friday.
The two days of hearings are taking place in a tense trade context between the EU and the United States where President Donald Trump accuses Europeans of deliberately attacking American technology giants.
The EU’s Competition supremo, Vestager, is in particular accused by the US president of “hating” the US. He has slammed her as the “tax lady” because of the investigations and heavy fines imposed on US groups such as Google.
Pending the conclusion of the case, Apple has blocked the funds in an escrow account: a total of 14.3 billion euros, after interest.
The group, which has been present in Ireland since the 1980s, employs around 6,000 people in Cork, the country’s second-largest city.
The first signs of how the Apple case may finish will come as early as September 24 when the General Court will rule on whether the EU was right to demand unpaid taxes from Starbucks and a unit of Fiat Chrysler.


Lebanon plans to charge for WhatsApp calls -minister

Updated 6 min 46 sec ago

Lebanon plans to charge for WhatsApp calls -minister

  • Jamal al-Jarrah said that cabinet had agreed a charge of 20 cents per day for calls used by applications including Whatsapp, Facebook calls and FaceTime
  • The fee could potentially bring in up to $250 million in annual revenues from the country's estimated 3.5 million VoIP users

BEIRUT: Lebanon's cabinet has agreed to impose a fee on calls over WhatsApp and other similar applications, as part of efforts to raise revenues in the country's 2020 draft budget, a minister said on Thursday.
Lebanon has one of the world's highest debt burdens, low growth and crumbling infrastructure and is facing strains in its financial system from a slowdown in capital inflows. The government has declared a state of "economic emergency" and promised steps to ward off a crisis.
Information Minister Jamal al-Jarrah said on Thursday that cabinet had agreed a charge of 20 cents per day for calls via voice over internet protocol (VoIP), used by applications including Facebook-owned Whatsapp, Facebook calls and FaceTime.
The fee could potentially bring in up to $250 million in annual revenues from the country's estimated 3.5 million VoIP users.
The country has only two service providers, both state-owned, and some of the most costly mobile rates in the region.
Lebanese TV channels cited Telecoms Minister Mohamed Choucair as saying the fee would "not be applied without something in return" which he would announce next week.
Finance Mininster Ali Hassan Khalil said last month there were no new taxes or fees in the draft 2020 budget he sent to cabinet.
Lebanon is under pressure to approve the 2020 budget to unlock some $11 billion pledged at a donor conference last year, conditional on fiscal and other reforms.
Prime Minister Saad al-Hariri has said the government would work to further reduce the 2020 budget deficit.
Foreign allies are not yet fully convinced the Lebanese government is serious about reforms, and a French envoy last month criticised the pace of work.
The government only approved the 2019 budget halfway through this year. Lebanon had until 2017 had gone 12 years without a budget.
Ahead of a cabinet session on Thursday, Jarrah said ministers would discuss a proposal to raise value-added tax by 2 percentage points in 2021 and then another 2 percentage points in 2022, until it reaches 15%.
After ministers agree the 2020 draft budget, they must send it to parliament for approval.