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Apple ordered to pay £11bn in back taxes to Ireland following three year investigation

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By Noel Young, Correspondent

August 30, 2016 | 3 min read

The European Union’s antitrust regulator is has ordered Apple to pay €13bn (£11bn) in back taxes to Ireland after it was found to have breached the EU state-aid rules.

Apple: Sweetheart deal

Apple: Sweetheart deal?

The Commission said Apple's tax benefits were illegal as it enabled it to pay substantially less than other businesses with what amounted to a corporate tax rate of no more than one per cent.

Ireland's finance minister, Michael Noonan, said that he disagreed "profoundly" with the decision.

"The decision leaves me with no choice but to seek cabinet approval to appeal. This is necessary to defend the integrity of our tax system; to provide tax certainty to business; and to challenge the encroachment of EU state aid rules into the sovereign member state competence of taxation."

Earlier reports from the The Wall Street Journal said analysts expect the commission to require Apple to pay back anywhere between $200m and as much as $19 billion. Reuters said Dublin would be told to recoup over €1bn in back taxes.

The EU decision is likely to aggravate trans-Atlantic tensions over the investigations into tax deals brokered between U.S. multinational corporations and individual European countries, said the Journal. Washington has said the probes unfairly target American companies.

Ireland previously has said it was confident its tax arrangements with Apple didn’t breach EU rules, and it would defend “all aspects” of the case vigorously, in court if necessary.

Previously Apple said the company received no special treatment and that the billions it brings in via the Irish-registered unit aren’t taxed there because that profit should be taxable in the U.S., where its research and development is based. The company added it would pay taxes in the U.S. if the funds are repatriated.

The European Commission’s antitrust agency opened a formal probe into Apple’s tax arrangements more than two years ago, accusing Ireland of striking deals in 1991 and 2007 with Apple that amounted to state aid.

The EU, at the time, suggested that Ireland had handed Apple the sweetheart deals in exchange for bringing more jobs into the country.

Last week, the US Treasury published a white paper sharply criticizing the EU’s tax investigations.

U.S. lawmakers have threatened to invoke a section of the tax code that allows retaliatory double taxation.

The case against Apple could become the biggest example yet in the effort European officials have made to claim more taxes from the world’s biggest companies.

Using structures based in countries including Ireland and Luxembourg, many of these companies reap billions in revenue but have little left in taxable profit.

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