Apple Inc., one of the world's largest tech companies, is currently at risk of paying a very hefty fine in Europe after the European Commission has initiated an investigation into its tax practices. If the investigation does find evidence of Apple's alleged accounting tricks, the company might end up paying up to $8 billion in back taxes, according to Bloomberg Business.
The European Commission, which began investigating the tech giant back in 2014, has stated that Apple's corporate arrangement in Ireland enables the company to calculate its profits based on methods that are more profitable. Doing so shelters Apple's profits, thereby reducing the amount the company owes the IRS in the United States.
Apple, which is considered one of the most profitable companies in the world, reported that the majority of its revenue, which amounted to $182.8 billion last year, came from abroad with a foreign tax rate of 1.8 percent, reports The International Business Times.
If the European Commission's ruling does take effect, the tax rate Apple must pay might be raised to as much as 12.5 percent. With the company's $205.7 billion cash on hand, the $8 billion fine would equate to about 4 percent of Apple's assets.
Apple CEO Tim Cook has expressly denied all the tax allegations, stating that the criticism the company is receiving about its tax practices abroad is complete "political crap." Cook further stated that the tax system itself is inadequate for today's digital economy, and thus it is in dire need to be updated immediately, according to MSN News.
Apple is not alone, however, as other American companies are also being investigated by the European commission, including Amazon, Starbucks and McDonald's.
