By Malcolm Owen
Tuesday, January 31, 2017, 10:26 am PT (01:26 pm ET)
Apple has missed the deadline to pay the 13 billion euros ($14 billion) the iPhone producer was ordered to pay Ireland in back taxes, but the European Commission is noting that progress is still being made by Apple to comply with its ruling.
The original deadline for completion of tax payment was January 3, but EU Competition Commissioner Margarethe Vestager accepts that it is still happening, albeit at a slower rate.
“The recovery is not done yet,” Vestager said in a statement to CNBC. “But, we have been working with the Irish authorities and we can see that they are moving forward to do the recovery of the unpaid taxes.”
“It’s a tricky thing to do because it’s a large sum, so of course you have to figure out how to do that,” Vestager added. “It’s not as an escrow account in some of the other cases where it might be 25 or 30 million euros, and therefore I do respect that it’s a complicated matter and it may take a little more time.”
The Irish Ministry of Finance advises it is still “continuing to make progress” with the full cooperation of the company and the EU Commission.
“The Commission [is] satisfied with the progress we are making,” said the Ministry. “We have committed to complying with the decision and we fully intend doing that.”
The European Commission made the ruling that Apple must pay Ireland back taxes in August 2016, over “illegal tax benefits” granted by Ireland that charged Apple at a rate of 0.005 percent in 2014, and 1 percent in 2003. The Commission also ruled the tax deals were “reverse engineered” on the fly to guarantee a minimal tax bill to Apple over time.
Both Apple and Ireland are contesting the Commission’s findings, with Apple claiming the European Union “took unilateral action and changed the rules, disregarding decades of Irish tax law, U.S. tax law, as well as global consensus on tax policy.” The Irish government is also “fundamentally disagreeing” with the findings.
Irish Finance Minister Michael Noonan advised the appeal has been made, and will “go to a European ordinary court first and then whoever loses will probably appeal it to the European Court of Justice.” Noonan suggests the entire appeals process could eventually complete within five years.
Earlier this month, Irish tax advisor Feargal O’Rourke suggested the European Commission’s ruling to demand tax repayment was a “land grab” and beyond its remit, warning the regulator “Doing it by ignoring the law is not the way to do it.” O’Rourke believes an appeal would overturn the Commission’s order if it reaches the European Court of Justice, provided the ruling isn’t politicized.