Apple is perhaps the highest-profile case of U.S. companies facing scrutiny from officials in Europe. Starbucks Corp., Amazon.com Inc. and McDonalds Corp. have also had its tax policies questioned. In October, Apple listed scrutiny of its taxes as a risk factor to investors. In addition to European regulators, the U.S. Internal Revenue Service has also examined the company's tax returns, Apple said. Were the tax rates to change, Apple's "financial condition, operating results and cash flows could be adversely affected," the company said in its financial statement for fiscal 2015.
On the matter of Apple taxes, Bloomberg Intelligence estimates that "Apple could owe more than $8 billion in back taxes as a result of a European Commission investigation into its tax policies. Apple, which has said it will appeal an adverse ruling, is being scrutinized by regulators who have accused the iPhone maker of using subsidiaries in Ireland to avoid paying taxes on revenue generated outside the U.S.
Apple Chief Executive Officer Tim Cook has denied that the company uses tricks to avoid paying taxes. In a recent interview on CBS Corp.'s '60 Minutes,' he called the criticism the company has faced from U.S. lawmakers 'political crap.' He said the tax system is outdated and needs to be updated for a digital economy."
For now, Apple will continue to play by its own rules until the European Commission and the U.S. IRS decide to clamp down on Apple which could as early as this spring. Last month Apple agreed to pay $348 million for tax evasion in Italy without having to admit to it. Will Apple take a similar approach to negotiations with the European Commission? While we await the answer to that question, you could check out the full BloombergBusiness report here.
Previous Reports on Apple Taxes Probe in Europe