Apple agrees to pay Ireland over $15 billion in back taxes

Apple to begin paying Ireland back taxes from early 2018

Apple to begin paying Ireland back taxes from early 2018

The ruling by the European Commission a year ago stated that Apple had to pay the fee as it had received unfair tax incentives in Ireland. While one might wonder why the Irish government might turn up its nose at almost $15 billion, by offering annual tax rates as low as 0.005 percent for over a decade, Ireland essentially acted as a tax haven-a status it has used to attract investment and presence by global corporations.

The tax arrangements, set up in 1991 and 2007, let Apple pay.005-percent and 1-percent tax rates on its European profits.

As a result of both parties contesting the ruling, the matter is now awaiting a European Court of Justice decision, and the money will be paid into the escrow account in the interim. The country strategically uses low tax rates to spur domestic investment from foreign corporations. The ruling obliges Apple to pay back €13bn.

Despite today's agreement, Apple's appeal remains in process, and its tax payments to Ireland will remain in escrow until that's exhausted.

The government announced the deal on Monday, while European Commissioner for Competition Margrethe Vestager met with Irish Finance Minister Paschal Donohoe on the issue. In October, the European Commission took the case to the European Court of Justice, the EU's highest judiciary body, in hopes of coercing Apple and Ireland to cooperate. "We remain confident the General Court of the European Union will overturn the Commission's decision once it has reviewed all the evidence", Apple told the Wall Street Journal (paywall).

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