Apple boss Tim Cook should stop whinging and pay up. There's nothing unfair about the EC's tax ruling

The tech giant's chief executive described the Eurpean Commission's demand as "maddening" and "political crap" in an interview with Irish broadcaster RTE. What's really maddening is the refusal of multinational corporations to pay their dues 

James Moore
Thursday 01 September 2016 12:29
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Apple CEO Tim Cook should stop whinging and concentrate on iPhone launch
Apple CEO Tim Cook should stop whinging and concentrate on iPhone launch

Having been handed a €13bn (£11bn) bill for back taxes – it is not a fine as some would have you believe – Apple boss Tim Cook has gone on the offensive.

The under fire tech giant’s chief executive chose Ireland’s state broadcaster RTE as the venue for a broadside against the European Commission in the wake of its ruling that the tax deal arranged between Apple and Ireland amounted to illegal state aid.

What he said was, well, hard for me to read without inflicting damage on my, erm, Apple Mac. So read on at your own computer's risk: “When you’re accused of doing something that is so foreign to your values, it brings out an outrage in you, and that’s how we feel. Apple has always been about doing the right thing.”

Oh Mr Cook. It's not you who should be feeling outraged. It's us. Even if you think that what the EC did was pushing it, this is is still a company that has cynically gamed the international tax system with the aim of depriving nation states from whose citizens Apple makes its living, the tax they are due.

Taking advantage of loopholes, employing accountants to manipulate the rules; Apple’s defenders might call that pragmatic. But it's hard to see how anyone not in the business of creating propaganda for Apple could describe its behaviour as “doing the right thing”.

Mr Cook, it appears, has no shame. “Total political crap,” he ranted. “Maddening.”

What’s maddening is the way multinational companies like Apple utilise their resources to avoid paying their share at a time of austerity. What’s maddening is the way tax authorities bring the hammer down on individual citizens for making honest mistakes while shrugging their shoulders when it comes to policing wealthy corporations.

As for “political crap”? This is a man who has hosted fundraisers for Hilary Clinton. If that's not political crap, I'd really like to know what is.

In many parts of the world Mr Cook's company enjoys rights that are very similar to those granted to individuals. It benefits from laws designed to protect free speech in democracies. It can sue for libel if its reputation is unfairly besmirched. It is free to spend money on influencing the political process to its advantage.

And yet when it comes to taking responsibility when the authorities find that rules have been broken? Apple and Mr Cook throw their toys out of their cot. That's not political crap. It's just... well you don't need me to spell it out for you.

There is politics at work here, it is true. Belatedly Governments are realising that their people won’t stand for it when wealthy companies – and wealthy individuals for that matter – are allowed to slip a few fifties under the table in return for sweetheart deals when hospitals are closing and school buildings, roads and bridges are crumbling.

It has helped to create a toxic cocktail, fuelling the rise of populist political outsiders, with consequences that could yet damage even Apple’s apparently bomb-proof business.

The EC’s critics have accused it of taking “retrospective” action. Apple has claimed that it is “rewriting history” and Mr Cook says the €13bn figure is “a false number” and he has “no idea where it came from”. I’m sure Margrethe Vestager would be happy to show him if one of his flunkies were to contact her office.

There isn’t anything retrospective about the action she has taken. Having considered the evidence she found Apple and Ireland breached the rules. As such, it should pay back the improper benefits it received, just as you or I would have to pay back taxes had we benefitted from improper deals.

The only controversy about this affair is in the time it has taken the European authorities to get their acts together. They are hardly alone in that.

It is true that efforts are under way via the OECD to reform the international tax system to make it harder for multinational corporations to exploit loopholes and to artificially shift profits from higher to lower tax jurisdictions.

The current case is unrelated to that, however, despite what US Treasury secretary Jack Lew would have you believe.

The EU’s authorities have made the case that the company violated rules that were already in place to prevent states from undermining their fellow EU members by handing companies bungs via the backdoor. In this case, via a tax deal that persuaded Apple to base its European HQ in Cork.

Mr Cook has said Apple will appeal, as is its right.

In the meantime he would do well to stop his whinging and instead focus on the launch of the new iPhone. If it lives up to the hype and people buy it in sufficient numbers that €13bn will become nothing more than a rounding error. Given the $200bn (£151bn) or so Apple has stashed offshore to keep it out of the hands of the US tax authorities, it’s almost that already.

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