G7 tax deal will see Apple pay higher taxes in Europe


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A G7 tax deal will see Apple pay higher taxes on its European sales, two aspects of the deal impacting the Cupertino company’s bottom line.

An agreement in principle was reached this weekend between the G7 countries – the United States, the United Kingdom, France, Germany, Canada, Italy and Japan – and the European Union …

First, it has been agreed that countries will set an overall minimum corporate tax rate of 15%. Apple currently pays a rate 12.5% ​​lower than Ireland, where its European headquarters are located. This means that all profits routed to Ireland from sales in the 27 EU countries, plus the UK, will be subject to the highest tax rate.

Second, Apple has historically avoided paying corporate tax to individual European countries, instead recording all profits in Ireland. The EU / G7 joint tax deal will also end this practice, as multinational companies will be taxed locally on at least 20% of profits above a 10% margin.

In return, European countries that have imposed or planned “digital taxes” on tech companies – like the UK and France – will abandon them. Digital taxes were an interim measure to impose a low tax rate on income rather than profits on sales in this country, designed to prevent companies like Apple from reporting profits in low-tax countries like the ‘Ireland.

The deal was announced in a communicated.

We strongly support the ongoing efforts under the inclusive G20 / OECD framework to address the tax challenges arising from the globalization and digitization of the economy and to adopt a global minimum tax.

We are committed to reaching a fair solution on the allocation of taxing rights, with market countries being granted taxing rights on at least 20% of profits exceeding a 10% margin for the most multinational companies. large and most profitable. We will ensure proper coordination between the application of the new international tax rules and the removal of all taxes on digital services, and other relevant similar measures, on all businesses.

We are also committed to applying an overall minimum tax of at least 15% country by country.

Some countries – including the United States – had hoped to agree to a higher rate of 21%, but the 15% minimum was accepted as a compromise to ensure that the G7 tax deal could be signed by all.

It is hoped that the deal will be extended to G20 countries next month, which would see the same rules apply to both India and China.

So far this is just a tentative deal meaning all signatories agree this is the right approach and they will implement the measures in their own tax laws, but no timeline. is not yet known.

BBC News reports that Ireland – which is said to be bound by the rules as an EU member – has only said its “concerns” should be noted.

Low-tax Ireland – which risks losing out on the deal – says the concerns of small countries need to be addressed.

Apple has yet to comment, but CEO Tim Cook has in the past said he favors this kind of cohesive comprehensive approach to tax reform. The measures agreed by the G7 and the EU are in line with a plan being discussed by the Organization for Economic Co-operation and Development (OECD).

Photo: Stefan Rousseau / Pool via AP

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