Apple under scrutiny by EU competition watchdog

Apple is being investigated by the EU's competition watchdog for paying less tax through its Ireland HQ, resulting in calls of unfair competition and allegations the actions are tantamount to illegal state aid.

Antoine Colombani, spokesman for European Union Competition Commissioner Joaquin Almunia said: "In this case, we have doubts that through tax rulings a company may have been granted selective treatment, preferential treatment, compared with what another company under the same rules, the general rules of the Irish tax system, would have received."

Apple has operated in Ireland since 1980, meaning the company has paid a much lower rate of tax in comparison to headquartering the company in the UK. Ireland's corporation tax stands at 12.5 per cent, but Apple receives a more preferential rate of two per cent because it reports some sales through subsidiaries.

The reason Ireland adjusts its rates of tax is to attract investment and jobs to the country from multinationals like Apple. Other examples of large companies that run operations from Ireland include Google, Cisco, eBay, Facebook, Dropbox and Amazon.

State financing is not allowed under EU law, but this rule doesn't take into account legacy arrangements.

Ireland's Department of Finance responded to the EU's Competition Commissioner saying: "Ireland is confident that there is no breach of state aid rules in this case and has already issued a formal response to the Commission earlier this month, addressing in detail the concerns and some misunderstandings contained in the opening decision."

Colombani said the outline of the case against Apple would be made public later today (Tuesday), with the publication of its finding appearing in the Commission's Official Journal in a few weeks' time. Apple can then respond to claims if it feels the information is not accurate.