Apple Europe, the wholly-owned subsidiary of Apple in the UK, announced that an agreement has been reached with Her Majesty's Revenue and Customs (HMRC) after the long auditing and negotiation. Under the agreement, Apple accepts the tax adjustment and will recover extra tax of £137 million to the HMRC.
There are two subsidiaries handling most of the business and operation of Apple in the UK, namely, Apple Europe Ltd (which is in charge of marketing, finance and customer service) and Apple Retail UK Ltd (which is focusing on operating online and physical hubs). Apple Europe provides sales and marketing services to the Ireland headquarters and is remunerated by commission fee. However, the HMRC found the commission fee charged by the subsidiary is abnormally low and this triggers adjustment concerning several financial years until 2015.
According to the report, Apple Europe Ltd claimed pre-tax profit of £297m during the past 18 months until April 1, 2017, with £57m of tax due cleared. The £137m in back taxes includes interest and unpaid tax, which means that Apple not only has to pay more tax for the past, but also for the future. “As a multinational business and the largest taxpayer in the world, Apple is regularly audited by tax authorities around the world. HMRC recently concluded a multiyear audit of our UK accounts and the settlement we reached with HMRC is reflected in our recently filed accounts,” according to the announcement.
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