Skip to main content
The Globe and Mail
Support Quality Journalism.
The Globe and Mail
First Access to Latest
Investment News
Collection of curated
e-books and guides
Inform your decisions via
Globe Investor Tools
Just$1.99
per week
for first 24 weeks

Enjoy unlimited digital access
Enjoy Unlimited Digital Access
Get full access to globeandmail.com
Just $1.99 per week for the first 24 weeks
Just $1.99 per week for the first 24 weeks
var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(select.open)}function setPanelState(o){dom.root.classList[o?"add":"remove"](select.open),dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){window.requestAnimationFrame(function() {var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))});}pencilInit(".js-sub-pencil",!1); // via darwin-bg var slideIndex = 0; carousel(); function carousel() { var i; var x = document.getElementsByClassName("subs_valueprop"); for (i = 0; i < x.length; i++) { x[i].style.display = "none"; } slideIndex++; if (slideIndex> x.length) { slideIndex = 1; } x[slideIndex - 1].style.display = "block"; setTimeout(carousel, 2500); } //

You wouldn't think we'd be taking sides against a cool, innovative, imaginative tech corporation, Apple Inc., and standing with one of the world's most opaque bureaucracies, the European Commission. But we are. And you should too.

Apple's deserved success doesn't depend – and never depended – on complex income-shifting and income-tax-fleeing arrangements, including income-tax enticements in Dublin that seemed mutually convenient, back in 1991. But its bottom line was helped by them.

On general principles, a company's profit is taxed according to where its value is generated. However, Apple created a number of internal arrangements that moved profits around within the company, and across geographies. For example, it stated that much of its intellectual property rights resided in Ireland, and that subsidiaries around the world were required to pay some share of their profits to the Irish subsidiary, as compensation for using Apple's intellectual property.

Story continues below advertisement

But Apple also had an arrangement with the Irish government under which nearly all of those profits notionally sent to Ireland ended up untaxed in Eire, or anywhere else.

The Irish government was quite happy with all this. It levied very little tax on Apple but, without this deal, it might not have collected any tax at all from Apple. The EU, however, says this accounting sleight of hand, and the special tax break thereby given to Apple, weren't acceptable under European law. It says the deal cost the Irish government 13 billion euros in unpaid taxes. And it has ordered Apple to pay up.

The Irish government seems at least as angry at the European Commission as Tim Cook, the CEO of Apple Inc. But Margrethe Vestager, the competition commissioner of the EU, is surely correct. Her job is to prevent EU countries from giving special advantages to particular companies. Aside from being anti-competitive, such special deals are pointless. Rather than creating economic activity and jobs, they merely shift them from one place to another, with taxpayers in the receiving place picking up the tab.

When it comes to innovation and marketing, Apple has a history marked by genius. But Apple is also one of many multinationals that has devoted considerable effort to, and shown a comparable genius for, tax-code alchemy. The EU was right to call it out.

Report an error Editorial code of conduct
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

If you do not see your comment posted immediately, it is being reviewed by the moderation team and may appear shortly, generally within an hour.

We aim to have all comments reviewed in a timely manner.

Comments that violate our community guidelines will not be posted.

Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies