What Apple’s $14.5 Billion Tax Bill Really Means

What Apple’s $14.5 Billion Tax Bill Really Means

The EU’s Executive Commission just ordered Apple €13 billion (AUD$19 billion) plus interest for back taxes it owes Ireland. So what does that bill really mean? For the most valuable company on Earth, not much.

To put that in perspective, that’s 24,369,747 iPhone devices, at an average selling price of $US595 ($792) a unit. Apple sold 40.4 million iPhones last quarter. The Cupertino company raked in a record $US18.4 ($25) billion in profits in the first quarter of 2016 and currently has $US232 ($309) billion in cash ($US214 ($285) billion of that is held offshore). So in the event that the company does have to pay this tax bill, it certainly has the means to do so.

However, Apple plans to appeal the decision so it might not come to that, and Bloomberg says the appeals process could take three or four years. The ruling is a result of a three-year investigation into the tax breaks that Ireland offered Apple. Apple, like many other multinational companies, has taken advantage of these types of tax breaks in countries like Ireland, to avoid paying large taxes in the United States. In exchange for lower tax rates, these companies will set up EU operations in those countries.

Apple and Ireland both insist that there has been no wrongdoing. In a statement, Apple said:

The commission’s case is not about how much Apple pays in taxes, it’s about which government collects the money. It will have a profound and harmful effect on investment and job creation in Europe. Apple follows the law and pays all of the taxes we owe wherever we operate. We will appeal and we are confident the decision will be overturned.

Meanwhile, Irish Finance Minister Michael Noonan said that he “disagree[s] profoundly with the commission’s decision.”

And so the beat goes on. If Apple did have to pay the $US14.5 ($19) billion tax bill, it could literally pay in cash. There’s a good chance the final number will come down, and there’s always a chance that Apple and Ireland could get off the hook completely.


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