“When you’re accused of doing something that is so foreign to your values, it brings out an outrage in you, and that’s how we feel. Apple has always been about doing the right thing, never the easy thing.” So said its chief executive, Tim Cook, on Thursday, still hopping mad about the European commission’s ruling that the iPhone-maker should pay €13bn (£11bn) in back-taxes to Ireland.
The plea of wounded innocence – plus the accompanying folksy tale about the company’s 37-year “marriage” with the people of Ireland – would be more persuasive if Cook would explain how on earth paying a corporate tax rate of 0.005% on European profits in 2014 fits with doing the right thing.
Cook says he disputes the commission’s numbers. Maybe so, but the EU competition chief, Margrethe Vestager, had a sharp retort: allow the world to see the confidential calculations on which the commission reached its conclusion. “If it was up to me, the confidential version would have been published yesterday ... It is very good for everyone to see our reasoning,” said Vestager.
The non-confidential version, as explained by the commission on Tuesday, makes a strong case that Apple’s choice of corporate structure in Ireland went well beyond any commonsense understanding of legitimate tax planning.
The bulk of profits were channelled through “head offices” that were not based in any country and did not have employees or premises. Those profits ended up being untaxed anywhere, not even in the US, alleges the commission. Apple, we might agree, wasn’t doing the easy thing; it was engaged in something difficult, in the sense of convoluted and elaborate.
Cook – who knows? – may be right that the commission’s ruling will be overturned on appeal. Brussels’ power to interfere in a long-standing tax deal between a EU national government and a company is unclear. And, as a competition commissioner, Vestager may have gone beyond her brief in making judgments on what constitutes illegal state aid.
Yet Cook, before denouncing the affair as “political crap” should put himself in his customers’ shoes. Most aren’t free to exploit the difference between the tax residency rules of Ireland and the US. Many are sick of the over-aggessive tax tactics deployed by too many multinationals. Some will conclude that Apple’s use of head offices that existed only on paper was a prime example of “corporate crap” that requires a fuller explanation by the company.
CBI needs to focus on infrastructure not banks
The CBI has always had a soft spot for banks (they’re some of its biggest members) but its director-general, Carolyn Fairbairn, is pushing her luck in calling for gentler treatment for the industry from regulators and government.
Specifically, she wants the mission statements of the Prudential Regulation Authority and the Financial Conduct Authority to be rewritten so that “growth and innovation” become part of regulators’ “raison d’être”. The call is framed as a need to ensure the financial services industry is competitive after Brexit, but it sounds suspiciously like a plea to return to the pre-crash era of light-touch regulation. No thanks.
For good measure, Fairbairn wants the government to set a date to end the corporation tax surcharge on banks’ profits, the successor to the bank levy introduced by the former chancellor George Osborne to help clean up after the crash.
Good luck with that. The levy-cum-surcharge brings in decent money for the Treasury and one suspects it will be around for at least a decade yet. The CBI would be better advised to concentrate on calling for more (and smarter) infrastructure spending to benefit the economy as a whole. The chances of success are greater, and the issue is surely closer to the hearts of its rank-and-file members.
Stress to impress - the City’s unwritten dress code
Always be prepared for Lord Rothschild to ring and invite you to lunch today, advised an esteemed City editor early in your correspondent’s career. Lord R never called at short notice but the sartorial advice was sound. An unwritten dress code operates in the City, so best not to put yourself at a tactical disadvantage.
There is, though, a world of difference between such commonsense instruction to look smart and the practices of the recruitment departments of investment banks, as described by the Social Mobility Commission. A loud tie, brown shoes (unless you’re from continental Europe, apparently) or an ill-fitting suit can kill a graduate interviewee’s chances, says the report. All fail the test for “polish”.
Unbelievable? Sadly, it rings true. The City has always been obsessed by appearance. Remember Swiss bank UBS’ 40-page guide to staff in 2010 that included a ban on eating onions and garlic? The commission claims investment banks’ fussiness-cum-prejudice is really a way to “set up barriers for individuals from non-privileged backgrounds”. Hard to prove definitively. But it sounds intuitively correct.
