The EU issued a 13 billion euro tax bill to Apple in order to make an example of it.

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　　On August 30th, the European Commission ruled that the American Apple Company illegally evaded taxes of 13 billion euros in Ireland, and Apple Company had to return the tax to the Irish government. This will be the largest tax collection bill issued by the European Union since the implementation of supervision on corporate taxation in member countries.

　　The American government’s intervention in this incident has made the commercial and trade contradictions between the United States and Europe more prominent.

　　To punish apples, the EU aims to make an example of them.

　　Margaret Vestager, European Commissioner in charge of competition affairs, said at a press conference held on 30th, "After a three-year investigation, the European Commission found that the Irish government gave Apple a competitive tax preference, which made Apple pay a considerable amount of tax less than other enterprises for many years. According to EU law, it is illegal for companies to obtain state tax assistance. The tax rules that Ireland reached with Apple in 1991 and 2007 were equivalent to state subsidies and violated EU law. "

　　Vestager said: "The standard tax rate of Irish corporate income tax is 12.5%, and the European Commission survey shows that Ireland’s selective tax policy has reduced Apple’s corporate tax from 1% in 2003 to 0.005% in 2014." To this end, the European Commission ruled that the Irish government must collect the tax (including interest) from Apple from 2003 to 2014 up to 13 billion euros, but the specific amount is determined by Ireland.

　　The European Commission disclosed Apple’s tax avoidance measures in a press release issued on the 30th: "According to Irish law, an Irish company may not pay taxes in Ireland if its management and control rights are not in the country. Using this unique tax law, Apple first set up an Apple International Sales Company in Ireland to receive all sales revenue outside the United States and enjoy a lower income tax rate. Then, through the parent company of Apple International Sales Company — — Apple International Operation Company transferred its profits to the British Virgin Islands, where the latter is headquartered. Since the management right of Apple International Operation Company is not in Ireland, there is no need to pay taxes in Ireland, and the British Virgin Islands is almost tax-free. "

　　In fact, Apple’s tax avoidance problem is just the tip of the iceberg. According to the EU’s estimation, tax avoidance causes tax losses of up to 70 billion euros to EU countries every year. The EU may also punish dozens of American companies such as Starbucks, Amazon and McDonald’s for tax avoidance in Ireland, the Netherlands, Belgium, Luxembourg and other "tax havens" over the past years.

　　In response to the ruling, Apple said it would not bow its head.

　　For the European Commission’s ruling, Apple showed an attitude of never bowing. The company issued a statement saying that most of its profits are paid taxes in the United States, and it has never requested or obtained any special arrangements. The company has always been committed to doing business in Ireland and plans to continue to invest. Apple believes that the EU’s ruling on this case may damage the investment of multinational companies in Europe, which is not conducive to the European economy.

　　Tim Cook, CEO of Apple, published an open letter to customers. He bluntly said that this ruling made the principle of legal certainty in Europe face a "devastating blow". Luca Mestley, Apple’s chief financial officer, even said rudely that 13 billion euros was a "fabricated figure".

　　The largest party group in the European Parliament — — Burkhard Balz, a spokesman for the European People’s Party, expressed support for the European Commission’s ruling. He said: "any enterprise operating in Europe should abide by the laws of the European Union, and no one can have privileges. In order to protect the EU internal market and ensure that no one violates the rules, we need consistent and strict competition rules and boldly implement them. " However, Balz expressed dissatisfaction with the tax refund to the Irish government. He thought that "this is simply a strange way to encourage member States to violate EU laws, and this money should be included in the EU budget and owned by the EU".

　　Ross Maulde, investment director of British Bell Investment Company, believes that the EU’s huge tax on Apple seems to be trying to establish a fair image by cracking down on large overseas companies that avoid tax, but it remains to be seen whether this is beneficial to the EU’s economy. He said: "Capital always flows to the place where it is welcomed. In the past 20 years, Ireland’s economic development has largely benefited from its low corporate income tax policy. The EU will bear huge risks due to the punishment of Apple, which may weaken the enthusiasm of other big companies to enter Europe, destroy the investment environment and affect potential employment and taxation. " It is reported that Apple has 5,500 employees in Cork, Ireland, accounting for about a quarter of its European employees. Apple is also the largest private employer in Cork.

　　Irish Finance Minister Michael Noonan expressed "deep opposition" to the European Commission’s ruling. He said: "Ireland’s tax system is strictly implemented in accordance with the law, without exception. The Irish government will appeal to the European Court of Justice. "

　　Come forward to support, the United States threatened to carry out "retaliation."

　　American business people, members of Congress, and even the Ministry of Finance and the White House came out to support Apple, accusing the European Commission’s ruling of being unreasonable. The U.S. Treasury Department issued a statement saying that the European Commission’s assessment of retroactive taxes and fees was unfair and violated generally accepted legal principles. The actions of the European Commission may undermine foreign investment, the business environment in Europe and the economic partnership between the United States and the European Union.

　　Ernest, a White House spokesman, said that he was worried about the unilateral approach of the European Union and believed that it would undermine the fairness of the international tax system to taxpayers and enterprises.

　　The US government said that the EU’s tax investigation on American companies such as Apple, Amazon and Starbucks would create a very "unfortunate" international tax precedent. A white paper issued by the US Treasury pointed out that the EU is becoming the world’s tax police, and warned that if the EU declares Apple "guilty", the US Treasury will consider taking "retaliatory measures". US Treasury Secretary Jacob Lew accused the European Commission of singling out American companies for investigation. The European Commission responded that the EU treated all companies operating in Europe equally, and the investigation did not specifically target American companies.

　　With the intervention of the US government, this incident has gradually evolved from a problem between Apple and the European Union to a contradiction between the United States and Europe, and the prominent political color may deepen the rift between the United States and Europe in many aspects.

　　According to the analysis, after all, Apple is a big guy, and it will not be easily convinced by a ticket issued by the European Union, nor will it affect the company’s operation and production mode. Apple has indicated that it will resolutely appeal. If the two sides can’t reach a compromise, it will mean a protracted "court war" is about to be staged.

　　(Brussels, Washington, August 31st)

　　■ Comments

　　Hu Tianlong (Research Fellow, Institute of International Monetary Studies, Renmin University of China): The European Commission’s ruling against Apple is a punishment for multinational companies’ tax evasion, and it is also a warning for multinational companies to abuse tax loopholes in various countries to reduce the overall tax burden of the company. At the same time, it also continues the EU’s practice of strengthening control and restrictions on multinational companies operating in EU member countries in recent years.

　　At present, nearly 3/4 of the global top 500 multinational companies evade taxes and reduce the tax cost of the group through various tax avoidance plans and means. These companies set up operations in offshore financial centers such as Bermuda, Ireland, Luxembourg and the Netherlands to avoid or delay the payment of huge amounts of taxes. Specifically, Apple adopted a clever tax planning called "double Irish sandwich with Dutch sandwich" to avoid tax. Apple registered its subsidiaries in Europe, the Middle East, India, Africa, Asia and the Pacific in Cork, Ireland, which means that two-thirds of Apple’s total global revenue is generated by Irish employees who only account for 4% of the total global employees.

　　The European Commission’s ruling itself is indeed suspected of interfering with the tax jurisdiction of the Irish government. To some extent, the implementation of the ruling by the European Commission has brought considerable uncertainty to the implementation and management of tax administration by EU member States. Except Ireland and Apple, which were dissatisfied with the ruling and said they would appeal, the White House and the Treasury both criticized and opposed the ruling.

　　It can be predicted that the ruling will definitely do harm to the EU in attracting foreign investment and maintaining the stability of employment and jobs. What’s more, the ruling may affect the negotiation of the transatlantic trade and investment partnership agreement (TTIP) between the United States and the European Union, and have a negative impact on the economic and trade cooperation and political mutual trust between the European Union and the United States.