Apple ordered to pay £11bn tax bill

A European Commission court has ruled that the US tech giant Apple must pay £11 billion back to the Irish government in unpaid taxes. The ruling directly from the EU has been seen by many as an aggressive challenge to corporations raking in humungous profits in countries that offer little resistance to tax evasion.

It was the opinion of the panel that in charging Apple an effective 0.005% tax rate the Irish government had provided the company illegal state aid. It’s difficult to argue that Apple either A) Broke any actual laws considering it arranged the deal with the Irish government directly or B) paid a fair amount of tax when it’s considered they paid just £50 for every £1 million in profits.

The decision has sent shock waves across the Atlantic as the US reacted angrily to the decision which is 40 times bigger than any previous European Commission decision. Apple themselves and the Irish finance minister, Michael Noonan, echoed the angry reactions from the US government as Apple warned that jobs and investment in Europe were at risk whilst Noonan said he disagreed "profoundly" with the decision and would seek Cabinet approval for an appeal.

The decision could be reduced if other countries decide to follow the same procedure and demand increased taxes from the company but it seems unlikely that any will actually enact the guidance. The European Commission seem determined to tackle preferential tax deals and this could start a large scale war of words between large corporations and the ruling body.

Commissioner Margrethe Vestager said: "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."

The probe found that Apple's profits were routed via Ireland to virtual head offices that had no employees, no premises and carried out no real activities. These profits were not subject to tax in any country under provisions of Irish law that are no longer in force. It meant that one subsidiary, Apple Sales International, paid a tax rate of just 1% in 2003, declining to 0.005% by 2014.