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Europe to order Apple to cough up 'one beeellion Euros in back taxes'

Shiny phone giant faces devastating two per cent drop in profits

The European Commission (EC) will demand an additional €1bn ($1.12bn) from Apple in back taxes, according to Reuters.

Back in 2014, the EC took issue with Ireland's tax arrangement with the electronics giant – Apple's European headquarters is in Dublin – and accused it of effectively allowing Apple to shelter tens of billions of dollars from tax authorities. It went so far as to call the approach "state aid."

On Tuesday, the Commission is expected to rule that Ireland broke international tax rules, and to provide a figure for back taxes that Apple needs to pay: one billion euros.

That figure won't be binding, since it will be up to the Irish tax authorities to decide what exactly needs to be paid, but it will act as a firm benchmark against which a final figure will be compared.

Although $1.12bn is no small figure, it is significantly less than the $8bn that some analysts had expected to be levied against the company. It is also just two per cent of the annual $50+ billion that Apple makes in profit, and half a per cent of the company's reported $200bn cash stockpile.

News of the decision made its way through the back corridors of power last week, prompting an unusual attack from the US Treasury in which it accused the EC of a power grab and argued that it was acting like "a supranational tax authority that reviews member states."

Earlier this year, the Commission ruled against 35 other companies – including Starbucks and Fiat – in a similar tax issue, and ordered them to pay a total of $765m in back taxes.

Both Apple and the Irish government claim they have done nothing wrong and have said they will challenge any ruling against them. ®

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