Apple's Irish tax strategy gets EU scrutiny, report says

The company is able to save boatloads of cash in taxes each year by funneling money to its Irish subsidiary. And now the EU wants to dig deeper into that practice.

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Apple's tax strategies in Ireland might soon come under the microscope of European regulators, a new report claims.

The European Commission (EC) will launch a formal investigation into the tax strategies Apple employs in Ireland to avoid paying higher taxes, Ireland-based broadcaster RTE is reporting. According to that report, the central focus of the investigation will be on Ireland's allowance of tax strategies to help companies like Apple avoid paying taxes elsewhere around the world.

Ireland has long been used as a tax haven for major companies. For years, tax authorities have complained that the likes of Apple, Google, and Microsoft have established a presence in Ireland to shift profits offshore and avoid hefty tax burdens elsewhere in Europe and in the US.

Last year, Apple was heavily criticized by US lawmakers for its alleged tax avoidance schemes. Reports submitted by a subcommittee of the US Congress revealed that Apple's Ireland-based subsidiary earned $22 billion in revenue in 2011 alone, but paid just $10 million in taxes. The company's Ireland-based subsidiary is believed to hold approximately 60 percent of Apple's profits, but due to Irish law, is allowed to claim itself as a non-taxing resident.

If those profits were brought back to the US, Apple's taxes could reach well into the billions of dollars.

For its part, Apple has maintained that it's working within the good graces of the law in Ireland. Apple CEO Tim Cook also said before a US Senate subcommittee last year that Apple is not a tax evader, but rather a job creator.

In today's RTE report, Ireland's Department of Finance said it stands by its tax practices. Last year, the country was reportedly considering changing its tax code to quell some of the unrest surrounding its stature as a tax haven in the European Union. That, however, never happened to a satisfactory level, based on the most recent report.

CNET has contacted Apple for comment on the report. We will update this story when we have more information.

(Via Reuters)

About the author

Don Reisinger is a technology columnist who has covered everything from HDTVs to computers to Flowbee Haircut Systems. Besides his work with CNET, Don's work has been featured in a variety of other publications including PC World and a host of Ziff-Davis publications.

 

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