Apple response to European Commission is opening shot in long battle, say PA experts

The European Commission has misjudged the political climate by demanding Apple pay the Irish government £11bn in back taxes, but the corporation's bullish response is a sign of the legal battle to come, public affairs experts told PRWeek this morning.

Apple is preparing for a war of attrition regarding its Irish tax arrangements (pic credit: Niall Carson/PA Wire)
Apple is preparing for a war of attrition regarding its Irish tax arrangements (pic credit: Niall Carson/PA Wire)
Following a three-year investigation, the Commission ruled yesterday that Apple's tax arrangements in the Republic of Ireland were illegal because they amounted to an effective rate of one per cent between 2003 and 2014.

Ireland’s standard rate of corporate tax is 12.5 per cent and the Commission said the government could not give tax benefits to selected companies.

But Apple responded bullishly to the ruling yesterday, using an online 'message to the Apple community in Europe' accusing the Commission of rewriting the company’s history in Europe, ignoring Ireland’s tax laws and creating havoc in the international tax system.

Nick DeLuca, director at Blue Rubicon Public Affairs, said the Commission had misjudged the current mood towards the EU.

He said: "This is post-Brexit and people are asking what the EU does, so to pick this moment to establish a precedent-setting fine, which is retroactive, and when the nation state doesn’t want you involved, seems very aggressive in light of that. Nobody stood up yesterday to defend the Commission over this and I don’t think it will get great support from the public either."

Apple's statement said that the decision would have "a profound and harmful effect on investment and job creation in Europe", and added that it would appeal and was confident of having the decision overturned.

Conal Walsh, partner and head of special situations at Powerscourt, said the statement had the hallmarks of a company which intended to go on the offensive.

He said: "Apple is hunkering down for a campaign of legal warfare. It will be long and attritional, and played out in politics and the media, as well as the courts. So there’s no point being polite about it."

Walsh said that even the reputational cost of fighting the decision could be secondary for Apple against the amount of money at stake. 

He added: "That said, no company accused of tax avoidance can hope to win public support in the current climate – it’s just not possible."

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