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31 Aug, 2016 10:43

Britain flutters eyelashes at Apple following European Commission tax ruling

Britain flutters eyelashes at Apple following European Commission tax ruling

Downing Street says it would “welcome any company” to the UK following a European Commission (EC) ruling which left tech-giant Apple facing a tax bill in Ireland of billions of euro.

The EC condemned Apple’s “sweetheart” tax deal with Dublin, which amounted to paying a mere £50 in tax for every £1 million in profit, and ruled the company must pay Ireland €13 billion (£11.1 billion, $14.5 billion) in unpaid taxes from 2003 to 2014.

The decision is a major blow for Ireland, which has sought to attract inward investment by lowering its corporation tax rate to 12.5 percent. However, the UK appears to see a silver lining.

“The narrative of the government has been well set out. Britain is open for business, we welcome any company wishing to invest in Britain and Britain’s workforce,” a Downing Street spokesperson said.

“You have seen today that [Trade Secretary] Liam Fox has laid out that we have had a record year for inward investment for the year up to May this year, which is proof we are one of the most attractive places to do business in.

“We would welcome any company that is prepared to invest in this country,” he said.

According to the Independent, the Treasury later followed suit, releasing a statement saying: “The UK is open for business and we welcome any company wishing to invest in Britain, but we have always been clear that companies that do business here must pay UK taxes.

“That’s why we led the G20 in creating international rules to make sure taxes are paid where profits are made and why we introduced the diverted profits tax to tackle profits moved overseas when they should rightly be taxed in the UK.”

Britain could benefit from the EU ruling, ETX Capital markets analyst Neil Wilson told the Daily Mail.

“If Ireland cannot offer sweetheart deals within the EU, the City of London can perhaps offer something more appealing outside the bloc.”

Apple’s tax agreements in Ireland were drawn up in 1991 and again in 2007, and allowed the company to pay a significantly reduced rate of tax on profits over more than 10 years.

But following a three-year long investigation, EU Commissioner Margrethe Vestager said member states could not give such 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,” Vestager said.

Apple says it will challenge the ruling. It has accused the EC of launching “an effort to rewrite Apple’s history in Europe” and “upend the international tax system.”

Ireland is also looking to appeal the decision, with Finance Minister Michael Noonan saying he “disagrees profoundly” with the EC’s findings.

The US Treasury has also responded to the EC’s decision, saying the ruling threatened the “business climate” between the US and Europe.