Boston, MA 06/12/2014 (wallstreetpr) – Apple Inc. (NASDAQ:AAPL) had done business with its subsidiary companies in Ireland which enabled the Irish companies to get some IP rights. The nature of the business arrangement with its Irish subsidiaries, helped Apple pay just about 3.7% as tax on its non-US income in 2013. CNBC speaks to Constantin Gurdgiev, who is the professor of finance in Dublin. CNBC Video.
Very Low Effective Tax Rate
Professor Gurdgiev confirms that the effective tax rate paid by the company is very low. He said “It accounts for 60% of the revenue that the company has derived globally and back in 2012 the number was actually 1.9%. Even Lower.” He further explained that in the period 2009 to 2012, Apple Inc. (NASDAQ:AAPL) has routed a business of close to $104 billion through its operations in Ireland, which employ close to 4000 people. It works out to revenue per employee of approximately $2.6 million.
The Professor highlighted the fact that the Senate Committee in US had expressed a view that Apple Inc. (NASDAQ:AAPL) had taken undue advantages of the tax avoidance mechanisms in Ireland. However, both Apple and the Finance Ministry of Ireland have officially confirmed that there has been no compliance breaches in case of Apple and that all documentation and information required by European Commission that is investigating this has been provided to them.
Should EU focus on tax practices of Governments?
Responding to a question on whether EU should focus more on tax practices of the Irish Government instead of going after a specific company, Professor Gurdgiev said the EU can only investigate unfair practices related to individual companies or group of companies, but it cannot technically go after individual government’s tax practices. In addition to Ireland, EU is investigating specific corporate tax deals in Netherlands and Luxemburg as well, for example Fiat S.p.A. (NASDAQ:FIATY). Joaquin Almunia, VP of EU feels that large companies should pay a fair share of tax.
As per EU this probe on Apple Inc. (NASDAQ:AAPL) is just the scratching the surface. More investigations would follow. Professor Gurdgiev feels that If EU were to find any irregularities, it could have significant ramifications for the Irish economy.
