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Comment by belorn | Hacker News Reader

The ruling is not that novel, and can be seen as just an other in a long list of fair trade laws. If EU allows nations to give subsidy to specific companies, then what stop other nations from using tariffs, preferential treatment, quotas, or other things which international trade law has fought against in the last few hundred years. Sovereignty over fair trade has been given up by most nations, including the U.S. (through they are also the ones that have been active in pushing such laws).

Ireland has a clear alternative, which is to grant such tax law for every company within their border. It would kill their budget, and bring down their own government, but they could do as is their right under sovereignty. Low tax is not illegal within fair market rules, so long everyone is competing on equal ground.

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Ireland DOES grant that tax law to all companies within their borders, as the article clearly outlines.

From TFA, among other relevant paragraphs:

> It is important to note that the words “any aid” covers not only one-off deals between Ireland and Apple, but also any general provision of the Irish Tax Code that would encourage favorable treatment.

Corporate tax in irland is NOT 0.005 percent. It is, as you even quoted, a one-off deal between Ireland and Apple.

The EU article simply covers any deal which would create such favorable treatment, and the key word is "distort competition".

"any aid granted by a member state or through state resources in any form whatsoever which distorts or threatens to distort competition by favoring certain undertakings or the production of certain goods shall … be incompatible with the internal market.”"

There are no one-off deals, and Apple doesn't pay 0.005%.

Apple pays Ireland 12.5% of all taxable-in-Ireland income. That's because that's Ireland's corporate income tax rate. Conveniently, because of the structure of Irish tax law, very very little income is taxable in Ireland. And that's more than is taxable in any other EU country. And, in fact, there's no country where very much of their income is taxable. Pretty awesome for them, I guess.

When the bullshitters say "paying 0.005% effective tax rate", they mean "when you take all their revenue everywhere [in the EU], they pay 0.005% on that". That's not how tax works for any corporation ever.

As I've said in another comment, what Apple is doing is basically a scam.

(1) Avoid paying taxes in the UK, Germany, France etc by claiming you're taxed in Ireland.

(2) Once in Ireland, channel the money into a fake company (0 staff, 0 offices) that is stateless and isn't taxed anywhere.

This is "creative accounting" at its finest.....

You're missing several stages in how the creative accounting works, and each of those stages are, separately, probably good things, which is why they exist in the first place.

Note, for example, that the UK and Germany and France all have laws that make it okay to avoid paying taxes by claiming (truthfully) that you're taxed in Ireland, according to the laws of tax residency of those respective countries.

But yes, it's an undesirable-to-collective-civilization loophole, and it'd be nice for it to be closed. I'd love for Apple to be compelled to pay more taxes. Yes yes yes! I'm surprised that the EU is making so much headway in this round, but if they fail in this round, I resoundingly hope they pass some new laws, such that they can win in the future.

The "head office" company isn't stateless, btw, and btw it technically has an office (usually a P.O. Box) and some people do work for it. There are maybe a dozen companies involved, including the actual-work-doing companies in the UK and Germany and France, and every one of those companies have an HQ in a state. I think that the "head office" is even located legally in Ireland.

> the UK and Germany and France all have laws that make it okay to avoid paying taxes by claiming (truthfully) that you're taxed in Ireland

Yes. The problem is that Apple isn't paying taxes in Ireland on the money it tells the UK and Germany and France is being taxed in Ireland.

There's no good way to gloss over this. It's either criminal or it's unethical.

It's not a scam as much as it's a loophole. The other countries allow for corporations to not pay taxes if they are paying taxes in another country. Apple is paying taxes in Ireland, so they are not required to pay taxes in those other countries. In Ireland, though, the law there says that you can only be taxed on income that's actually generated in Ireland. Since Apple only generates sales income in Ireland from things like online sales and regional sales, they only get taxed on those amounts. It's a loophole. The loophole should be closed, but I don't think Apple should have to pay anything in back taxes because what they were doing was completely legal and allowed by all the laws currently in place.

> It's not a scam as much as it's a loophole.

You surely don't mean that Apple accidentally created a stateless company with no staff and no buildings to swindle taxpayers out of billions? I'm pretty sure a lot of planning went into it.

If it's arguably legal, there's nothing ethical about going out of your way to devise and exploit these "loopholes".

Frankly, it's just what you'd expect from a brutal multi-national corporation that mercilessly exploits underpaid Chinese workers, despite having over $200 billion in cash....

I never said that planning didn't go into it nor did I suggest that there was any accident. It's a loophole, though. It's a creative way to use the current, lawful tax codes. Why would a company pay more than what they're legally entitled to pay? That's literally throwing money away. As I said, in my last comment, the loophole should be closed but to suggest that Apple should pay back taxes on it is ridiculous.

Edit: I also want to push back on your comment about them exploiting Chinese workers. Apple doesn't exploit the workers, the factory owners do. Apple does everything it can to minimize the exploitation of the workers including random factory audits and employee surveys. No other electronics company in the US does this and, frankly, Apple doesn't have to. They pay someone to make components for them and if the company they pay say that they can make those components, then that's really the end of the story. Apple realizes that Chinese culture and law don't support human rights and well-being so they go above and beyond to try and correct the situation. If they were as monolithic and uncaring as you claim, they wouldn't even do that.

You need to do more research. Apple says it does have responsibility for workers in its supply chain, and some of your statements are not factually correct.

Here's an example of how Apple actually works. (1) Enough Foxconn workers commit suicide to put pressure on Apple. (2) Foxconn increases pay and improves working conditions. (3) Apple moves some iPhone production from Foxconn to Pegatron, which is cheaper, because Pegatron workers earn less and are treated worse.

Apple moved some production from a company that made real efforts to stop child labor (school-children bussed in for "work experience" on production lines) to one where it still goes on.

Given that Apple has a $200 billion cash mountain and the workers get peanuts, this is a shitty way to behave.

If you want to take the line that Apple can be as unethical as it likes in exploiting Chinese workers and tax loopholes -- because profits -- then I guess you have bigger problems.

Except that's not at all what I said and none of your statements are factually correct. You have no evidence for any of what you just said and ignored evidence that Apple has done more than either company to raise the standards at these factories. They moved production from Foxconn exactly because of these faults.

And I never said they can be as unethical as they like either, so I won't be replying further as you can't make your point without being deceptive and straw-manning.

Haha. As I said, you need to do more research. You could start with China Labor Watch. You'd also do better if you approached this with an open mind.

> They moved production from Foxconn exactly because of these faults.

Love to see your evidence for that, if there is any.

> ignored evidence that Apple has done more than either company to raise the standards at these factories

Depends how you measure it. Apple makes the most money and, because it needs to maintain a false image, it has the most to lose. However, it's been aware of child labor since 2008, if not earlier. It must also be aware that companies engineer around its guidelines, so they are more of a PR stunt than anything else.

A hugely rich company like Apple could certainly make a difference if it were serious. Pity it isn't.

I do approach this with an open mind and I have looked at China Labor Watch extensively. Unfortunately, they're not unbiased either and their "research" has, in the past, included production lines that were not producing Apple products but products of other manufacturers. In addition, even CLW has had to admit that conditions improved drastically for Apple's manufacturing lines due to their random audits. Apple also was the only company to initiate an investigation into Foxconn via the FLA to prevent exactly what you're describing.

Again, it's not a magic wand that they can wave and magically remove all child labor. The only thing they can do is contract their suppliers under fair working conditions and audit them to make sure that the contract is keeping their word. Apple doesn't own those factories, they don't hire the employees, and they don't run the lines. They simple order product from these companies under certain conditions (including workers protections) and are promised that those conditions will be met. I don't know what else you expect them to do and I'm curious if you're this vehement about all the other manufacturers that use the same factories and don't make contractual guidelines, don't audit the factories, and don't actively investigate them.

So much for you "not replying further" ;-)

Apple wasn't the first to audit production lines, but it does have some special problems. For a start, its "big bang" event-based marketing model puts exceptional stress on pre-launch production, and on Foxconn when it needs to find 200,000 or so extra staff.

There are other aspects, too. (1) Apple markets itself as a "good" company, which invites criticism when it behaves like any other brutal capitalism corporation, or worse; (2) Apple's $200 billion cash pile means it has no excuse for the frequently appalling treatment of Chinese workers; (3) Tim Cook has said that Apple is responsible for everyone in its supply chain.

So the lame excuse that "everyone does it" doesn't apply.

The bottom line is that Apple knows perfectly well that its guidelines are not being followed, and that it can afford to treat its workers better. But if it's not being hammered in the press for it, it really doesn't care.

afaik the problem is this.

apple should pay taxes where they do business, but they dont, they tunnel everything thru ireland.

and ireland says, ok apple you have to pay only the tax on the income u generated here in ireland, everything that came from outside is free.

> It is, as you even quoted, a one-off deal between Ireland and Apple.

no, the phrase referred to _possible_ one-off deals between Ireland and Apple. Just mentioning them does not cause them to appear.

See:

> the words “any aid” covers not only one-off deals between Ireland and Apple, but also any general provision...

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