Apple is paying more taxes in the UK following the lifting of the European Union’s profit diversion law | Instant News


Apple could be made to pay more in taxes on income from Britain, a proposal from Chancellor of the Exchequer Rishi Sunak suggested, with the repeal of laws that could potentially affect how tech giants manipulate their taxes en route.

The UK Treasury’s annual budget outlines changes to inbound taxes and other policy updates that could affect the way individuals and companies are taxed. One small change has been seen in the announcement that paved the way for bigger tax changes that could affect Apple and other tech companies in the future.

Buried as a line in the budget announcement but further explained by the UK government website, proposal found by Bloomberg repeal laws affecting royalty payments.

The repeal of the provisions in the Interest and Royalties Directive affecting UK companies making “annual interest or royalty payments” to related companies within the European Union. In particular, the repeal removes applicable tax exemptions affecting EU companies when funds are transferred in such a way.

Therefore, EU companies “no longer receive preferential treatment than companies based elsewhere in the world,” the policy said. As a result, companies in EU countries will be treated the same as companies based in other regions regarding royalty payments.

Apple, like other multinational companies, uses tax rules to funnel revenue through the most tax-efficient route, minimizing the amount of tax paid to the government. For UK revenue, this involves paying royalties paid to Apple’s European headquarters in Ireland.

Apple’s use of headquarters in Ireland for tax purposes is very profitable for Apple iPhone maker. Currently in the midst of a prolonged legal dispute with the European Union over a $ 14.4 billion tax rules.

The rule change is unlikely to be a big expense for Apple or others at the moment, as the UK Treasury believes it will only generate an additional 10 million pounds ($ 13.8 million) annually to the government. However, these changes appear to be the first step for the government to implement other changes that can minimize the amount of shifting taxes.

“The lifting will make it easier for the UK to target royalty and interest payments to European tax haven countries if the UK is to set aside the tax treaty, as there will not be a second layer of direction to prevent reimbursement,” said TaxWatch executive director. George Turner. With the UK’s “Brexit” from the EU, there is also no requirement to follow its tax directives.

A Treasury spokesman described the policy as a “post-Brexit technical change,” and will continue to comply with international obligations, such as the Double Tax Treaty. Britain “continues to be at the forefront of global action to tackle tax avoidance, with a series of decisive actions to tackle regulating earnings changes,” they continued.

In February, German Finance Minister Olaf Scholz warned of that global tax reform “very likely” introduced in 2021, affecting Apple and other tech giants. Negotiations in the OECD are still ongoing to change tax laws, with an international agreement to close a tax loophole that could potentially arrive in the summer of 2021.

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