A tax lesson from Apple and the European Commission
By Willem Oberholzer
Apple has been told it will not have to pay Ireland 13 billion (R252bn) in back taxes after winning an appeal in the EU’s second-highest court.
The European Commission brought the action after claiming Ireland had allowed Apple to attribute nearly all its EU earnings to an Irish head office that existed only on paper, thereby avoiding paying tax on EU revenues.
Ireland, which has one of the lowest corporate tax rates in the EU, is Apple’s base for Europe, the Middle East and Africa.
Reading the above makes you think of the haves and the have-nots, and the bright versus the ignorant.
Who is disgruntled? Do you feel that your government is doing right by you? There is a contract between the citizens of a country and its government. We pay tax, and you must spend it wisely, keep everything working, and not steal.
So we are locked in, we are not allowed to earn an income, to protect the country against the collapse in the healthcare system, that may or may not have been neglected to hide some of the shenanigans, and then we get slapped with fines and penalties when we pay our taxes late, or underestimate them.
Does reading the above seem equitable? Does it seem fair? Or do you get the feeling that there is something red in the air - something that comes from Stalin, Lenin and Marx? Are we being told what to do, and what we cannot do, and when we may earn a living, and we require to render unto Caesar what is due to Caesar?
I think there is justification for some of us looking at emigrating, financially or otherwise, or investing our funds in more favourable jurisdictions.
We are living in unprecedented times, nothing is as it was, and nothing will ever be as it was. It’s a “new normal”, they tell us. No, it’s not a new normal; an “alerted reality” is the right phrase, I think.
Tax planning is not illegal. You are allowed to plan your life. If you, like so many, are worried about your altered reality, please take this advice: plan your tax.
If you want blindly to give your hard-earned money to a red dragon called Lenin, be my guest.
However, if you are like those who have seen the light, who have realised that the red dragon did not work anywhere in the world, and that people who are deprived of their fundamental freedoms will react, then get your financial planning and your tax planning in order.
There is a reason Apple won. They planned. Some - the have-nots - would argue they planned aggressively, but they did it legally, and they won. They applied their minds, and they structured their transactions to minimise the tax leakages, let alone leave it in jurisdictions where it could be squandered.
Planning is not illegal; aggressive tax planning is just that; but it is not unlawful when done correctly. And ask yourself whether you care what the “have-nots” have to say. Or is the livelihood of your family, the food on your table, and the well-being of your staff and their families more important?
Willem Oberholzer CA(SA) is the chief executive of Probity Advisory.