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Apple may pay much more than $8 billion for evading taxes

Few weeks ago Apple was accused in tax evading, the case was not closed and European Commission recently extended and expanded its scope.

apple-tax-ec

As was mentioned before, Apple transmits all of its earns from Europe through Ireland, since Irish taxes are only %2.5, compared to other countries where the tax is %12.5. Currently, the European Commission started to investigate the legality of this case. If we take for granted that the agreement between Apple and Irish government will be considered as illegal, the one who will be accused in breaking the law will be the Irish government, and not Cupertino company. However, Apple would still have to pay the full amount of tax.

Last year, Apple warned its investors that probably they will have to pay some difference of %10 in taxes, however their estimates were much lower than the value calculated by Bloomberg now. The total amount might exceed $8 billion dollars. Additionally, each individual European country where were recorded any sales of Apple production may request a payment from Apple for evading taxes set in their countries. This situation already occurred in Italy, where Apple agreed to pay €318M ($347M) demanded by Italian tax office for just two years. Now, just imagine if each European country would do the same, it’s not hard to realize the amount of total bill that could be demanded from Apple.

Let’s expect that this case would not reflect in Apple production prices. There are rumors that Apple might increase the prices by 10% to cover the tax rates. However, the truth is that Apple did nothing wrong and didn’t break the law. By registering the tax headquarter in Ireland, Apple just made a smart business decision based on the way the laws and agreements are working in that country.

What’s your point of view of this situation?

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