Yin and Yang are in full force at Apple right now, where its most massively successful product launch ever has been counterbalanced by an onslaught of scandals and bad news. First, there was iPhone 6 Plus “Bendgate.” Then, Apple bricked about 40,000 new iPhone 6 and iPhone 6 Plus handsets with a buggy iOS 8.0.1 update. Earlier this week, a few big security flaws were found in iOS 8.0.2, and now Apple is in hot water over what the European Commission (EC) claims amounts to about $8 billion in unpaid taxes.
Now, Apple has responded publicly for the first time to the EC’s allegations.
According to preliminary finding detailed in a report released Tuesday morning by the EC, tax agreements struck in Ireland in the early 1990s and late 2000s “confer an advantage on Apple” that is does not comply with European tax laws.
As Business Insider noted, here are the key passages from the EC’s report (emphasis added):
In the light of the foregoing considerations, the Commission’s preliminary view is that the tax ruling of 1990 (effectively agreed in 1991) and of 2007 in favour of the Apple group constitute State aid according to Article 107(1) TFEU. The Commission has doubts about the compatibility of such State aid with the internal market.
The Commission wishes to remind Ireland that Article 108(3) of the Treaty on the Functioning of the European Union has suspensory effect, and would draw your attention to Article 14 of Council Regulation (EC) No 659/199935, which provides that all unlawful aid may be recovered from the recipient.
This is obviously a very serious issue that could end up costing Apple billions in fines. As such, Apple issued a public response to Business Insider, which can be read below in its entirety.
Apple is proud of its long history in Ireland and the 4,000 people we employ in Cork. They serve our customers through manufacturing, tech support and other important functions. Our success in Europe and around the world is the result of hard work and innovation by our employees, not any special arrangements with the government. Apple has received no selective treatment from Irish officials over the years. We’re subject to the same tax laws as the countless other companies who do business in Ireland.
Since the iPhone launched in 2007, our tax payments in Ireland and around the world have increased tenfold. To continue that growth and the benefits it brings to the communities where we work and live, we believe comprehensive corporate tax reform is badly needed.