EU investigation of Apple’s tax avoidance

WASHINGTON – Sen. Carl Levin, D-Mich., chairman of the Senate Permanent Subcommittee on Investigations, said the following today after the European Union released details of the special tax arrangement Apple has negotiated with the Irish government:

“For more than a year, Apple and the Irish government have denied the company’s special tax deal in Ireland that dramatically reduces Apple’s global tax bill.  The EU’s investigation has confirmed what my Permanent Subcommittee on Investigations showed:  that there is such a deal.  The public now has the minutes of negotiations on the agreement that Apple claims didn’t exist, an agreement that won Apple a tax rate of less than 1 percent.  The facts are abundantly clear:  Apple developed its crown jewels — lucrative intellectual property — in the United States, used a tax loophole to shift the profits generated by that valuable property offshore to avoid paying U.S. taxes, then boosted its profits through a sweetheart deal with the Irish government.  Apple’s Irish tax rate has no rational basis; it was determined by what Apple was ‘prepared to accept’ – with the threat that it would cut jobs in Ireland if it didn’t get its way.  That low tax rate came on top of Apple’s ploy of saying its three main Irish subsidiaries are not tax resident anywhere.  Hopefully this finding will help persuade Congress that we should close the loopholes in our tax code that allow Apple-type gimmicks whose sole purpose is to avoid paying U.S. taxes.”

Note: Today’s EU release draws significantly on the subcommittee’s memorandum outlining its investigation of Apple’s tax practices and the record of the subcommittee’s May 21, 2013, hearing. You can read the subcommittee memo here [PDF] and video and a printed record of the hearing here