European Commission orders Apple to pay Ireland 13 bn euros in back taxes

The European Commission on 30 August, ordered Apple to pay 13 billion euros in back taxes to Ireland, saying that the US firm's Irish tax benefits were illegal.

According to an international news agency, the Commission said Ireland enabled the company to pay substantially less than other businesses, in effect paying a corporate tax rate of no more than 1%, whereas, the standard rate of Irish corporate tax was 12.5%.

Apple effectively paid 1% tax on its European profits in 2013 and about 0.005% in 2014, concluded the commission's investigation.

According to reports, both Apple and Ireland will appeal against the record penalty.

"Member states cannot give tax benefits to selected companies - this is illegal under EU state aid rules," Commissioner Margrethe Vestager was quoted by the agency.

"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," she was quoted saying.

Vestager said that the tax agreement reached between Ireland and Apple meant that the company's taxable profits "did not correspond to economic reality", reports the news agency.

"The European Commission has launched an effort to rewrite Apple's history in Europe, ignore Ireland's tax laws and upend the international tax system in the process," the company said in a statement.

"The Commission's case is not about how much Apple pays in taxes, it's about which government collects the money. It will have a profound and harmful effect on investment and job creation in Europe.

"Apple follows the law and pays all of the taxes we owe wherever we operate. We will appeal and we are confident the decision will be overturned," their statement further read.