(Adds comment from Apple, expert analysis)
DUBLIN, June 10 The European Commission will
launch a formal investigation on Wednesday into Apple Inc's
tax arrangements in Ireland, Irish state broadcaster
RTE reported, without naming its source.
The EU's competition authority said last year that it was
looking into corporate tax arrangements in several member states
and had requested information from Ireland.
Antoine Colombani, a spokesman for competition issues at the
Commission, declined to comment on the RTE report. Ireland's
finance ministry said it had not been informed of any
Irish Prime Minister Enda Kenny declined to comment on
whether the Commission might be preparing to open an
investigation but said he was confident of the legality of
Ireland's tax system.
"We believe that our legislation ... is very strong and
ethically implemented and we will defend that very robustly,"
Kenny told journalists in Dublin.
A U.S. Senate subcommittee investigation revealed last year
that Apple had cut billions from its tax bill by declaring
companies registered in the Irish city of Cork as not tax
resident in any country.
Senator Carl Levin, chairman of the subcommittee, said the
Apple structure represented "the Holy Grail of tax avoidance."
Apple in the United States entered into deals with the Irish
subsidiaries whereby the Irish units received the rights to
certain intellectual property that were subsequently licensed to
other group companies, helping ensure almost no tax was reported
in countries such as Britain or France.
Apple's Irish arrangement helped it achieve an effective tax
rate of just 3.7 percent on its non-U.S. income last year, its
annual report shows - a fraction of the prevailing rates in its
main overseas markets.
The focus of the investigation will likely be tax regimes
that are favourable to certain companies, including Apple,
rather than the companies themselves. Technology companies such
as Google Inc and Microsoft Corp have cut
their overseas tax rates to single digits by establishing
Dublin-registered subsidiaries, which they have designated as
tax resident in Bermuda.
An Apple representative had no comment. The company has
previously said it complied with the law. "We pay all the taxes
we owe - every single dollar," Apple Chief Executive Tim Cook
testified to U.S. Senate committee investigators last year.
Apple shares ended up 0.6 percent at $94.25 on the Nasdaq on
Tuesday. Analysts say that the investigation is unlikely to have
a major impact on Apple's share price.
Piper Jaffray analyst Gene Munster said investors are
currently "hyper-focused" on new product speculation.
"I don't think it will be a problem unless Apple did
something illegal," said Munster.
(Reporting by Conor Humphries; Additional reporting by Barbara
Lewis in Brussels and Christina Farr in San Francisco and;
Editing by Louise Heavens and David Evans)