Apple’s €13bn EU tax bill could build 9 Burj Khalifas

Apple Ireland taxes iPhone

Apple’s giant pile of cash reserves has just gotten dented – but it could recover from next month’s release of the iPhone 7. The Cupertino-based tech giant has been ordered to pay up to €13 billion (about Dh53.3 billion) in back taxes to the Irish government.

That’s enough to build nine Burj Khalifas.

But first, the details. EU antitrust regulators who passed the order ruled that a special scheme to route profits through Ireland constituted illegal state aid, Reuters reported.

Lower taxes for Apple

Margrethe Vestager, the commissioner in charge of competition policy, said the ruling was a clear signal that such measures are unacceptable, the Guardian reported, because Apple was taxed at a lower rate than other businesses operating in the republic.

“Member States cannot give tax benefits to selected companies – this is illegal under EU state aid rules. The commission’s investigation concluded that Ireland granted illegal tax benefits to Apple, which enabled it to pay substantially less tax than other businesses over many years.

“In fact, this selective treatment allowed Apple to pay an effective corporate tax rate of 1 per cent on its European profits in 2003 down to 0.005 per cent in 2014.”

The commission says the deal enabled Apple to avoid taxation on almost all profits generated by sales of it products in the entire EU single market. This was made possible due to Apple’s decision to record all sales in Ireland rather than in the countries where the products were sold.

The commission’s release is available here.

The amount is 40 times the size of the largest previous such European Commission order.

Ireland is tasked with recovering the amount for the decade, which it must use to pay down its national debt.

Both Apple and Ireland have already said they will appeal the decision.

Apple employs about 6,000 people in the country.

€13 billion explained

As of this January, the company has cash reserves of approximately $216 billion (Dh793 billion), or as CNBC said of its $203 billion surplus last year, “the total net-worth of Bill Gates, Warren Buffett, Mark Zuckerberg and Jack Ma combined.”

By comparison, it cost $1.5 billion to build the Burj Khalifa. If Ireland so wanted, it could build nine equivalents with the money from the fine and still have some change left over.