Apple’s Cook and France’s Macron talked taxes Monday

But they didn’t discuss the $14.5 billion elephant in the room.

From Bloomberg’s report:

Apple Inc. Chief Executive Officer Tim Cook met Emmanuel Macron in Paris Monday, and according to French officials he didn’t push back against calls by the French president and European allies to change rules in the region to get technology giants to pay more taxes.

The two met at the French presidential palace at the request of Cook.

Macron is leading a group of countries—including Germany, Italy and Spain—that are seeking a way to plug the European loopholes that allow some companies to minimize taxes by funneling profits to jurisdictions such as Ireland or the Netherlands. Macron’s office said the two didn’t discuss past tax disputes, but Cook accepted that fiscal laws worldwide are shifting toward making companies pay tax where money is actually earned…

Monday’s meeting was Macron’s first with an Apple CEO as president. French officials said they also discussed climate change, education, and French economic reforms. Since becoming president in May, Macron’s also met the heads of Alibaba Group Holding Ltd., Google, Facebook Inc., and Cisco Systems Inc.

My take: “Didn’t push back against” barely qualifies as news. Whatever. I’m pretty sure that when the Europeans figure out what the tax rules should be, Apple will follow them. See also: Apple’s tax reform tailwind could be huge

5 Comments

  1. Sandro Castellaro said:

    Apple should rightfully pay corporate income taxes in the US. The EU itself admitted as much when it determined that Apple had avoided up to $14B in taxes. If tax reform passes and Apple pays the taxes on money it repatriates to the US treasury and continues to pay the (hopefully) reduced corporate tax rate, that should put an end to any claim the EU member states have.

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    October 10, 2017
    • Ken Cheng said:

      If I understand you correctly, I think you’re saying that with a potential 10% repatriation tax, that Apple should be indifferent since the potential $14B in tax arrears to Ireland, would be a credit against the repatriation tax?

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      October 10, 2017
      • Sandro Castellaro said:

        In essence yes

        https://www.nytimes.com/2016/08/31/technology/apple-tax-eu-ireland.html

        “In essence The commission said the amount due in Ireland could be reduced if the American authorities decided that Apple should have paid more tax in the United States.”

        https://qz.com/770068/the-eu-is-all-but-inviting-the-us-to-claw-back-a-share-of-apples-tax-debt/

        “The commission explained in a separate statement that the tax penalty to be recovered by Ireland would be reduced if US authorities “require” Apple to retroactively shift income, allocated for research and development costs over the 10-year period of the investigation, to its US parent company.
        The company divides R&D costs and the revenues they generate between Apple Inc., in the US, and Apple Sales International, an Irish subsidiary. The idea is that each entity pays its share of the R&D costs, and therefore books the corresponding amount of revenue.
        But a 2013 inquiry by a US senate committee quashed that premise. The committee found that almost all of the research work was done in the US, but a majority of the resulting revenues were being booked in Ireland, where we now know Apple enjoyed effective tax rates as low as 0.05% in 2011. The arrangement meant that Apple could keep the fruit of its R&D labors out of the US.
        The US senate committee urged a rethink of US tax laws to end arrangements like Apple’s, but nothing was done. The European commission’s finding against the tech giant, however, could prompt action, because real money is finally in play.
        “Europe’s just trying to get what they think they’re owed,” says Frank Clemente, executive director of Americans for Tax Fairness, an advocacy group. “The US can make a case that the money Europe is trying to collect is money [the US] is trying to collect, because frankly, it all flows from Cupertino.”

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        October 10, 2017
  2. Ken Cheng said:

    If the proposed US corporate tax reform plan does lower the US rate to 20%, while raising the tax rate on foreign income to around 20%, then the incentive to move income to lower tax jurisdictions is minimized. Of course there will still exist an incentive to move income, if a country’s tax rate is greater than the proposed US rate on foreign income, but it should be small.

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    October 10, 2017
  3. John Kirk said:

    No company should avoid paying the taxes they legally owe.

    No company should pay taxes they don’t legally owe.

    If there’s a “loophole” in the tax law, blame the law, not the company taking advantage of what the law allows.

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    October 10, 2017

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