Following the European Commission's ruling that Apple received illegal state aid from Ireland, and must pay $14.5 billion in back taxes to the country, the company has published a new FAQ that addresses potential concerns investors may have about the decision and the effect on its bottom line.
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Apple started out by confirming the decision is not final and that it plans to appeal. The company is "confident" the ruling "will be overturned" by courts in the European Union, but it notes the process is "likely to take several years." In the meantime, Apple does not expect any near-term impact on its financial results.
How does this decision impact Apple’s near-term financial results?
Will you take a tax charge? Does this alter your previous guidance?
We do not expect any near-term impact on our financial results nor a restatement of previous results from this decision. We have previously accrued U.S. taxes related to the income in question. The tax rate guidance for Apple’s fourth fiscal quarter that we provided on July 26, 2016 does not change as a result of this decision.
Apple added that it does not currently expect the decision to have an impact on its tax rate or cash balance going forward, but the company anticipates it will place an unspecified amount of cash in an escrow account. Apple expects the amount will be reported as restricted cash on its balance sheet.
The European Commission's ruling followed a three-year inquiry into Apple's tax arrangements in Ireland, where it paid between 0.005% and 1% in taxes from 2003 through 2014, compared to the country's headline 12.5% corporate tax rate. Apple insists it "follows the law and pays all of the taxes" it owes.
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Top Rated Comments
I don't understand EU tax law. It seems Ireland's own laws says what Apple is doing is legal.
It's not EU tax law, it's EU competition law.EU competition law forbids special deals that amount to state aid to companies.
The state aid happened to have taken the form of reduced taxes.
Personally I think Apple firstly being almost fraudulent in its tax payments dodging, and then posting a letter to Europe claiming they are innocent and Ireland was nothing till they showed up, will have lost them some sales.
We shall see though. You don't bite the hand the feeds you which is EXACTLY what Tim Cook has done today by threatening any further EU investment now because of their tax dodging being exposed. That arrogant American attitude doesn't win over European consumers Tim.
Except the EU itself is hardly popular in the EU itself right now, and it could also come across as "why the hell is the EU interfering in the tax laws of a member state? Shouldn't they have the right to do whatever they want? A lot of people feel the EU is interfering too much. So it could go either way really.
You have severely underestimated the attitudes of Europeans towards giant corporations, this is actually a good thing. The EU provides a hell of a lot better consumer laws then America does and no one is complaining about that!Just curious... how much cash do they have stored in the bank again?
Let's put it this way, the tax demand is about 6% of their cash on hand. But they'll fight it tooth and nail for years, even if they'll have to spend those 6% on tax attorney fees.