"Ireland's cabinet may be given more time to decide on whether to back the finance minister's recommendation that Dublin appeal the European Commission's ruling against its tax dealings with Apple," reports
Reuters (Aug. 31, Halpin). Finance Minister Michael Noonan stated yesterday that he "disagreed profoundly" with the Commission's order that the U.S. technology giant should hand over to Ireland unpaid taxes of up to 13 billion euros, which were ruled to be illegal state aid. He will be seeking approval for an appeal from cabinet later today. "The minority government led by Noonan's Fine Gael is reliant on the support of a number of independent lawmakers," notes the wire service, "a group of whom -- the Independent Alliance -- said on Tuesday that they were reviewing the decision and would need to further consult with Noonan, tax officials, and independent experts." If the Independent Alliance opted not to back an appeal and pulled out of government, Fine Gael would no longer have enough support in parliament to pass legislation. The government could subsequently collapse.
According to the
Wall Street Journal (Aug. 31, Rubin), the European Commission’s ruling Tuesday that Apple Inc. must pay US$14.5 billion in back taxes to Ireland marked a sharp break with the U.S. Treasury Department and further complicates efforts to forge a bipartisan deal on U.S. tax policy that had seemed plausible but remains out of reach." To the Treasury and various Capitol Hill legislators, EU regulators represent a significant threat partly because companies could get U.S. tax credits if they pay more abroad, thus reducing future U.S. tax collections. The United States is trying to safeguard its claim to the foreign income despite the fact that policy makers have yet to figure out how to tax it. Among the most vocal has been Sen. Charles Schumer (D-N.Y.), who on Tuesday called the EU's actions a "cheap money grab" targeting American companies.
Fortune (Aug. 31, Gandel) adds that Apple's EU tax fine may take a bigger bite out of the company than shareholders are acknowledging. Shares of the iPhone maker trade at a price-to-book ratio of 4.5 times the company's net worth, meaning that shareholders have been valuing every dollar of net assets the company holds at $4.50 on the assumption that Apple will be able to turn those assets into more money. But if Apple has to shell out $14.5 billion, that should slice $65 billion off of its market value. The tech giant's cash probably gets a lower premium than some of its other assets. But subtract the cash, Fortune notes, "and the rest of Apple’s assets trade at 7 times its book value. That would be more than Google’s price-to-book value of just over 4 times earnings, and around what Facebook’s assets are valued at." Both of those companies are growing their revenue much faster than Apple, however, and should get a higher book value.
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