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EU orders Apple to pay up to €13bn in Irish taxes - business live EU orders Apple to pay up to €13bn in Irish taxes - business live
(35 minutes later)
3.04pm BST
15:04
US consumer confidence stronger than expected
More positive US economic data, with August consumer confidence figures coming in better than expected.
According the Conference Board, the consumer confidence index rose from 96.7 in July to 101.1, better than the 97 forecast and the highest level since September 2015.
USA Consumer Confidence announcement - Actual: 101.1, Expected: 97.0 pic.twitter.com/NziWWkavwv
2.58pm BST
14:58
Elsewhere the Bank of England bought another £1.17bn of long dated bonds - maturing in 15 years or more - as part of its quantitative easing programme.
It received offers representing 2.08 times the number of bonds it wanted to buy, up from 1.54 a week ago.
2.51pm BST
14:51
Apple decision "bizarre" - Ireland's Noonan
German economy minister Sigmar Gabriel has backed the EU ruling that Apple has to pay up to €13bn in Irish taxes, and named another target. Reuters reports:
Gabriel said it was important that companies like Apple and Alphabet Inc’s Google are made to pay their taxes.
Meanwhile Irish finance minister Michael Noonan, who earlier said the country would appeal against the EU decision, has been making a few more comments. He told broadcaster RTE:
As far as I am concerned there is no economic basis for this decision. It’s bizarre and it’s an exercise in politics by the Competition Commission.
They don’t have responsibility for taxes and they are opening a back door through state aid to influence tax policy in European countries when the European treaties say tax policy is a matter for sovereign governments.
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2.38pm BST
14:38
Wall Street opens roughly flat
Only small moves in US markets in early trading on Tuesday, following gains on Monday:
2.34pm BST2.34pm BST
14:3414:34
US house prices dip in JuneUS house prices dip in June
US house prices dipped by 0.1% in June on a seasonally adjusted basis according to the latest Case-Shiller index.US house prices dipped by 0.1% in June on a seasonally adjusted basis according to the latest Case-Shiller index.
The report, which measures property prices in 20 cities, showed the annual pace of growth slowed to 5.1% from 5.2% in May.The report, which measures property prices in 20 cities, showed the annual pace of growth slowed to 5.1% from 5.2% in May.
Portland, Seattle, and Denver reported the strongest annual rises in June.Portland, Seattle, and Denver reported the strongest annual rises in June.
David Blitzer, managing director and chairman of the index committee at S&P Dow Jones Indices, said:David Blitzer, managing director and chairman of the index committee at S&P Dow Jones Indices, said:
Home prices continued to rise across the country led by the west and the south. Overall, residential real estate and housing is in good shape.Home prices continued to rise across the country led by the west and the south. Overall, residential real estate and housing is in good shape.
2.20pm BST2.20pm BST
14:2014:20
Almost time for Wall Street to open. IG is forecasting a very slight fall in US markets:Almost time for Wall Street to open. IG is forecasting a very slight fall in US markets:
US Opening Calls:#DOW 18497 -0.04%#SPX 2180 -0.03%#NASDAQ 4784 -0.13%#IGOpeningCallUS Opening Calls:#DOW 18497 -0.04%#SPX 2180 -0.03%#NASDAQ 4784 -0.13%#IGOpeningCall
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at 2.21pm BSTat 2.21pm BST
2.16pm BST2.16pm BST
14:1614:16
Hollande throws TTIP trade deal into doubtHollande throws TTIP trade deal into doubt
The French president Francois Hollande has thrown the TTIP free trade deal further into doubt by saying it will not be completed before Barack Obama leaves office in January.The French president Francois Hollande has thrown the TTIP free trade deal further into doubt by saying it will not be completed before Barack Obama leaves office in January.
Hollande said discussions between Europe and the US over the Transatlantic Trade and Investment Partnership had become “bogged down”.Hollande said discussions between Europe and the US over the Transatlantic Trade and Investment Partnership had become “bogged down”.
Addressing French ambassadors, Hollande said:Addressing French ambassadors, Hollande said:
The negotiations are bogged down, positions have not been respected, it’s clearly unbalanced.The negotiations are bogged down, positions have not been respected, it’s clearly unbalanced.
It followed comments over the weekend from German economy minister Sigmar Gabriel, who said talks had failed:It followed comments over the weekend from German economy minister Sigmar Gabriel, who said talks had failed:
In my opinion, the negotiations with the United States have de facto failed, even though nobody is really admitting it.In my opinion, the negotiations with the United States have de facto failed, even though nobody is really admitting it.
1.53pm BST1.53pm BST
13:5313:53
The FTSE is lagging its European peers this afternoon.The FTSE is lagging its European peers this afternoon.
1.38pm BST1.38pm BST
13:3813:38
German inflation slows unexpectedlyGerman inflation slows unexpectedly
In other news, German inflation slowed unexpectedly in August, suggesting price pressures remain weak in Europe’s largest economy.In other news, German inflation slowed unexpectedly in August, suggesting price pressures remain weak in Europe’s largest economy.
The EU harmonised annual rate of inflation fell to 0.3% from 0.4% in July. Economists polled by Reuters were expecting the rate to pick up to 0.5%.The EU harmonised annual rate of inflation fell to 0.3% from 0.4% in July. Economists polled by Reuters were expecting the rate to pick up to 0.5%.
Consumer price inflation on the national measure was unchanged in August at 0.4%.Consumer price inflation on the national measure was unchanged in August at 0.4%.
Carsten Brzeski, ING’s chief economist in Germany, say the European Central Bank has a tough job at its policy meeting next week:Carsten Brzeski, ING’s chief economist in Germany, say the European Central Bank has a tough job at its policy meeting next week:
Today’s German inflation data will not make the ECB’s already difficult life any easier. Ahead of next week’s policy meeting, available data has been too inconclusive to justify any (significant) change to the ECB’s current monetary policy stance.Today’s German inflation data will not make the ECB’s already difficult life any easier. Ahead of next week’s policy meeting, available data has been too inconclusive to justify any (significant) change to the ECB’s current monetary policy stance.
Normally, the staff projections have a so-called cut-off date some ten days ahead of the ECB meeting. This would mean that this week’s set of macro data will not have any impact on the ECB’s staff projections, leaving the projections with a rather benign reaction to the Brexit vote and no hard macro data after the second quarter.Normally, the staff projections have a so-called cut-off date some ten days ahead of the ECB meeting. This would mean that this week’s set of macro data will not have any impact on the ECB’s staff projections, leaving the projections with a rather benign reaction to the Brexit vote and no hard macro data after the second quarter.
Consequently, we expect only very few changes to the ECB staff’s outlook for inflation and growth. Against this background, the ECB will probably try to buy some additional time before making another move. In order not to come entirely empty-handed at next week’s press conference, the ECB could drop the current deposit rate floor for its purchases of government bonds. This would address the increasing problem of bond scarcity and would also buy some time.Consequently, we expect only very few changes to the ECB staff’s outlook for inflation and growth. Against this background, the ECB will probably try to buy some additional time before making another move. In order not to come entirely empty-handed at next week’s press conference, the ECB could drop the current deposit rate floor for its purchases of government bonds. This would address the increasing problem of bond scarcity and would also buy some time.
1.22pm BST1.22pm BST
13:2213:22
Henry McDonaldHenry McDonald
A Cabinet meeting will be held in Dublin tomorrow to discuss the fallout from the EU’s ruling against Apple’s tax arrangements with the Irish state.A Cabinet meeting will be held in Dublin tomorrow to discuss the fallout from the EU’s ruling against Apple’s tax arrangements with the Irish state.
Finance Minister Michael Noonan has already briefed his counterpart in the Fianna Fail party, Michael McGrath, about the government’s course of action in appealing against the decision in Brussels.Finance Minister Michael Noonan has already briefed his counterpart in the Fianna Fail party, Michael McGrath, about the government’s course of action in appealing against the decision in Brussels.
At the heart of the Fine Gael led administration’s objections to any potential €13 billion tax windfall from Apple is that it would cause Ireland “reputational damage” in the eyes of other - mainly US - multi-nationals thinking of establishing their European base in the Republic.At the heart of the Fine Gael led administration’s objections to any potential €13 billion tax windfall from Apple is that it would cause Ireland “reputational damage” in the eyes of other - mainly US - multi-nationals thinking of establishing their European base in the Republic.
Left-wing parties in Ireland have criticised the government’s position on not wanting to force Apple to pay up what the EU says it owes the Irish exchequer . They have demanded that the €13 billion be channeled into either the Irish health service - the figure is exactly the amount spent each year on public health - or invested in public housing, especially in Dublin where there is a major lack of homes.Left-wing parties in Ireland have criticised the government’s position on not wanting to force Apple to pay up what the EU says it owes the Irish exchequer . They have demanded that the €13 billion be channeled into either the Irish health service - the figure is exactly the amount spent each year on public health - or invested in public housing, especially in Dublin where there is a major lack of homes.
However, Fine Gael, the main opposition party Fianna Fail, and a host of independent deputies serving as ministers in the coalition government support the policy of a low taxation regime for multi-nationals because they have created hundreds of thousands of jobs in the state.However, Fine Gael, the main opposition party Fianna Fail, and a host of independent deputies serving as ministers in the coalition government support the policy of a low taxation regime for multi-nationals because they have created hundreds of thousands of jobs in the state.
1.17pm BST1.17pm BST
13:1713:17
Margrethe Vestager the EU commissioner in charge of competition has spoken to CNBC, and admitted the Apple case is not done and dusted:Margrethe Vestager the EU commissioner in charge of competition has spoken to CNBC, and admitted the Apple case is not done and dusted:
We have a strong obligation for equal treatment to any country in the EU single market.We have a strong obligation for equal treatment to any country in the EU single market.
I think it is more likely that Ireland will continue to appeal the case to the European court system and then of course they will also look at it but that is the most probable situation looking forward.I think it is more likely that Ireland will continue to appeal the case to the European court system and then of course they will also look at it but that is the most probable situation looking forward.
1.15pm BST
13:15
Outlining Apple’s long-standing commitment and economic contribution to Ireland, where it employs almost 6,000 people, Cook goes on to say:
Cook also fires a warning shot on the implications for jobs and investment in Europe:
Beyond the obvious targeting of Apple, the most profound and harmful effect of this ruling will be on investment and job creation in Europe.
Using the Commission’s theory, every company in Ireland and across Europe is suddenly at risk of being subjected to taxes under laws that never existed.
12.59pm BST
12:59
Apple says it will fight EU ruling on Irish tax
Apple has published a strongly-worded statement from chief executive Tim Cook in response to the EU’s ruling that the company must pay up to €13bn in back-dated tax to the Irish government.
In a statement entitled ‘a message to the Apple community in Europe’, Cook rejects the EU’s findings and says the US tech giant will appeal the ruling.
The European Commission has launched an effort to rewrite Apple’s history in Europe, ignore Ireland’s tax laws and upend the international tax system in the process. The opinion issued on August 30th alleges that Ireland gave Apple a special deal on our taxes. This claim has no basis in fact or in law.
We never asked for, nor did we receive, any special deals. We now find ourselves in the unusual position of being ordered to retroactively pay additional taxes to a government that says we don’t owe them any more than we’ve already paid.
Cook goes on to say the commission’s move undermines the sovereignty of EU member states:
The Commission’s move is unprecedented and it has serious, wide-reaching implications. It is effectively proposing to replace Irish tax laws with a view of what the Commission thinks the law should have been. This would strike a devastating blow to the sovereignty of EU member states over their own tax matters, and to the principle of certainty of law in Europe.
Ireland has said they plan to appeal the Commission’s ruling and Apple will do the same. We are confident that the Commission’s order will be reversed.
Updated
at 1.39pm BST
12.16pm BST
12:16
A few more quotes from Margrethe Vestager, the European Commissioner for competition who announced the Apple ruling:
Member states cannot give unfair tax benefits to selected companies, no matter if they are European or foreign, large or small, part of a group or not.
[In 2011], for every million in profits, it [Apple] paid just €500 in taxes. This effective tax rate dropped further to as little as 0.005% in 2014 which means that even less was paid in taxes - it was €50 euros per €1m in profits.
I have the feeling that if my objective tax rate were 0.05% falling to 0.005%, maybe I should have had a second look at my tax bill.
Our decision concludes that splitting the profits [between different Apple companies] did not have any factual or economic justification.
The company’s head office - or so called head office as it only existed on paper - had no employees, no premises and no real activities.
11.56am BST
11:56
Anneliese Dodds, a British member of the European parliament, says the EU ruling on Ireland’s sweetheart tax deal is a “watershed moment” in the fight against tax avoidance and evasion.
Once again the EU is showing that it leads the way in the fight for tax justice. If the commission has found that the Irish government arranged a special sweetheart deal for Apple in the early 1990s, then it is absolutely right to call an end to this practice and demand that Apple repay the money that it has avoided in taxes for over twenty years.
The Tory government in the UK should take note of today’s landmark decision when it approaches Brexit negotiations. Today’s decision should mark a watershed moment in the fight against tax avoidance: the race to the bottom on tax must stop, and we must make sure all companies – whatever their size – are able to compete in a fair environment.
It is important that the Commission continues to resist interference from the US Government when dealing with tax affairs in Europe. All multinationals, regardless of their country of origin, must abide by EU competition law if they wish to access the European market.
11.51am BST
11:51
The European Commission has provided a graphic to try and help explain Apple’s tax affairs in Ireland:
11.38am BST
11:38
Noonan: Ireland will appeal EU ruling on Apple
Ireland does not want the money from US tech giant Apple.
Michael Noonan, Ireland’s finance minister, says the government will appeal the EU ruling, adding that he disagrees “profoundly” with the decision in Brussels:
The decision leaves me with no choice but to seek cabinet approval to appeal the decision before the European Courts.
This is necessary to defend the integrity of our tax system; to provide tax certainty to business; and to challenge the encroachment of EU state aid rules into the sovereign member state competence of taxation.
It is important that we send a strong message that Ireland remains an attractive and stable location of choice for long-term substantive investment. Apple has been in Ireland since the 1980s and employs thousands of people in Cork. The company has continued to expand its operations in Ireland in recent times.
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11.32am BST
11:32
To put Apple’s Irish unpaid tax bill in context, the Guardian’s Henry McDonald in Dublin says €13bn is the equivalent of one year’s spending in the Irish health service budget...
11.29am BST
11:29
This is real change, and it is change for the better.
- EU commissioner Margrethe Vestager on the Apple tax ruling.
The commission found fault with two tax rulings issued by Ireland to Apple that have “substantially and artificially lowered the tax paid by Apple in Ireland since 1991”.
It says almost all profits recorded by two Irish incorporated companies of the Apple group were attributed to a “head office”. However, the commission found these head offices existed only on paper, and could not have generated such profits.
These profits allocated to the “head offices” were not subject to tax in any country under specific provisions of the Irish tax law, which are no longer in force.
As a result of the allocation method endorsed in the tax rulings, Apple only paid an effective corporate tax rate that declined from 1% in 2003 to 0.005% in 2014 on the profits of Apple Sales International.
11.21am BST
11:21
11.20am BST
11:20
The European Commission’s investigation into Apple’s tax affairs began in June 2014.
It concluded on Tuesday that Ireland has been giving the US tech giant illegal state aid since 1991, adding:
The commission can order recovery of illegal state aid for a 10-year period preceding the commission’s first request for information in 2013. Ireland must now recover the unpaid taxes in Ireland from Apple for the years 2003 to 2014 of up to €13 billion, plus interest.
The tax treatment in Ireland enabled Apple to avoid taxation on almost all profits generated by sales of Apple products in the entire EU Single Market. This is due to Apple’s decision to record all sales in Ireland rather than in the countries where the products were sold.
This structure is however outside the remit of EU state aid control. If other countries were to require Apple to pay more tax on profits of the two companies over the same period under their national taxation rules, this would reduce the amount to be recovered by Ireland.
UPDATE: Apple shares down 1.6 percent in premarket trade after EU orders Apple to pay 13 billion euros in tax.