Apple accused of $8bn tax evasion in European Commission probe

Apple has been accused of tax evasion amounting to over $8bn (£5.2bn). A recent probe by the European Commission (EC) is reported to have held the iPhone maker responsible for allegedly evading taxes through profit-booking using subsidiaries in Ireland. The probe dating back to 2014 is yet to be finalised by the EC and is likely to conclude in March.

According to a Bloomberg report, the EC contends that Apple's corporate arrangement in Ireland allows it to allegedly manipulate the tax bill in a way that calculates low profits coupled with low operating costs. Consequently, Apple is allegedly paying less to the Irish government, wherein its foreign tax rate currently stands at 1.8%.

According to Matt Larson, a litigation analyst for Bloomberg Intelligence, Apple is said to be generating about 55% of its revenue outside the US and if the commission's probe in the case gains momentum, it could implement tougher accounting standards and thereby increase Apple's tax liability to 12.5% on the net profit of $64.1bn generated from 2004 to 2012.

Apple has faced similar issues in recent times, as the company was forced to pay €318m (£235m) to Italian tax authorities in December 2015. The company was then accused of booking profits to the extent of €879m that were generated in Italy through a subsidiary in Ireland, in a bid to lower its taxable income base.