Apple to Begin Paying Irish Government $16 Billion in Back Taxes
Apple (NASDAQ: AAPL[/stock/) is set to begin paying back €13 billion euros, about $16 billion USD by today's exchange rates, in taxes the European Commision claims it owes to Ireland as a result of illegal tax cuts the company received between 1991 and 2007. The decision weighed in Ireland's favor (really the EU's favor as Ireland is somehow attempting to delay recovering the money) back in August 2016.
Apple CEO Tim Cook has stated the ruling is "total political crap" which is the technical term a CEO uses when he is faced with forking over 16 billion dollars for something he doesn't agree with. Cook is pushing for a European appeals court to overturn the landmark 2016 decision, and that's a big reason why all the funds are being kept in a mutually agreed upon escrow fund. The appeal is expected to be heard this autumn.
Paschal Donohoe is the Irish Finance Ministers and told reporters Tuesday, "This is a very, very significant day now in terms of dealing with this issue." He added that he expects the escrow account to be fully funded by the end of September. For its part, Apple will still claim the cash as "restricted free cash" on its balance sheets until all appeals are exhausted.
The money was originally supposed to be recovered by Ireland in January 2017, four months after the initial ruling. However, the country has stalled the efforts to move the collection process forward, perhaps to avoid souring their relationship with Apple. As a result of the delays, Apple may be faced with up to $2 billion in additional interest that will be owed after the original $16 billion is handed over to Irish authorities.
Ireland will invest the fund's vast monies in low-risk securities while awaiting legal closure on the issue.