An Apple of Discord: The Irish Haven
One of the largest developments for Apple in this decade took place last week, as the iPhone manufacturer got slapped with the largest tax evasion fine in European history. This will undoubtedly affect the investment climate in the EU and especially in Ireland, where certain companies and businesses have found their own slice of corporate heaven, or so they thought. The Apple stock is not going to do well in the future.
The worst case scenario
The Apple’s executioner, Margrethe Vestager is building quite a name for herself: ever since she got in charge of EU’s competition commission, she has taken on some serious opponents, and may even add Google to her list of trophies soon enough. Too bad she isn’t interested in regulating binary option brokers .
Still, in her judgment on Apple’s Irish shenanigans, she concluded that a series of laws and regulations have been violated and that the company received unfair advantage over its competition – not to mention netting some nice tax cuts in the process. It took three years to conclude this investigation, but it seems Apple is going to have to pay 13 billion euros in back taxes as well as issue another set of financial statements to its investors. And on top of that, there is the stock price to consider… This will seriously impact the price of Apple shares. Of course, binary option traders can still make money even under these circumstances.
It is no secret that Ireland has enjoyed a reputation of a place where a US-based company can list its intellectual property for tax purposes and take advantage of paying some of the lowest corporate taxes on the planet while still doing business all over the world.
The Irish Response
As for the Irish government, they seem reluctant to accept the money, which should come as no surprise considering the numerous ‘warnings’ the White House has issued to EU officials that they should back off Apple, Amazon and Google. Apparently 0.005% is a fair amount of taxes for Apple in 2014. Needless to say, this kind of response has not sit well with neither the company nor the EU as a whole. Even now, Apple is threatening to close several thousand jobs all over Europe because of the trouble they have received. One thing is for certain: Apple investors are in for a rough couple of months to say the least.
According to Apple CEO Tim Cook, this whole process is a political nonsense that is fueled by prejudice towards US companies. However, some analysts do point to a strange timing of this decision, amidst of failed negotiations of a massive trade agreement between the EU and the US. Still, to call this a retribution against the US would be far-fetched in the least, especially considering the fact that Apple has indeed been engaged in the activities it was accused of and now has to pay the price.
The corporations strike back
Apple is only the largest of the corporations currently being forced to pay a huge sum in back taxes, but they far from being the only one. Google, Amazon and even McDonalds are also on the list, although Apple is by far the loudest one of them all right now. They have announced the possibility of closing a number of offices which would result in the loss of roughly 20 – 24,000 jobs in the EU (for Apple alone), and this crisis may even affect the US-EU relations in the long run. After all, the EU was warned repeatedly by Washington not to meddle with US companies, and Brussels has effectively ignored all of these.
However, if the loss of more than 20,000 jobs is not grave enough, considering roughly 1.4 million people who could be affected in some way or another, should Apple choose to close shop and move away. These people do not work for the company directly, but their jobs are tied to it nevertheless. If you also take into account the fact that Apple has not technically violated Irish laws, it could seem almost understandable why their executives are up in arms about the treatment they have received.
Nevertheless, this will not spare them from paying the sum they owe, although appeals may save them a pretty penny down the line as well as postpone this massive payment, giving the investors extra time to brace for the impact on their wallets. A lot of bottom lines are going to be affected and this story is far from over.