Would Apple ever have an HQ in Turkey?
Two days ago, I felt really good when I saw Deputy PM Mehmet Şimşek’s tweet to Apple. It was an invitation to Apple, saying they should invest in Turkey instead of Ireland and get rid of European bureaucracy. Of course, I did not know about the 14 billion-euro tax punishment that the EU is demanding. I thought that Şimşek’s call was about our innovative power, our young and educated minds or our competitiveness, but it was only about being able to lower taxes as we see fit.
According to CNN Money, in 2014, Apple paid just $50 in tax for every million it made selling iPhones and iPads to most of the world outside America. That’s a tax rate of just 0.005 percent. Apple has funneled most of its profits from Europe, the Middle East, Africa and India through Ireland for decades.
But under deals the company struck with the Irish government as far back as 1991, it was allowed to split these profits between its Ireland branch and an Apple head office that existed only on paper. Apple paid the standard Irish tax rate on profits booked to its Ireland branch. Those it allocated to the phantom head office were tax free, because under Irish law, it was then considered a “stateless company.” In 2011, Apple Sales International made 16 billion euros in profits. Less than 50 million euros were allocated to the Irish branch. The rest went to the “head office,” out of reach of any tax authority.
Similar deals were made with other tech giants too.
Apple (AAPL, Tech30), Google (GOOGL, Tech30), Facebook (FB, Tech30), eBay (EBAY) and Twitter (TWTR, Tech30) have all set up their EU headquarters in Ireland. And with them came the jobs. Apple employs 6,000 people in Ireland, many of them making iMacs at a factory in Cork – once a deprived city in the south of Ireland.
The United States is intervening in the matter, too. According to the BBC, the U.S. Treasury said that such tax investigations were “unfair” and undermined the tax rules of individual states. Charles Schumer, a senior Democrat senator, called the move a “cheap money grab.” White House spokesman Josh Earnest argued that if Apple paid the back taxes, it might offset that amount against tax due in the U.S., which would be unfair to American taxpayers.
Mehmet Şimşek wants to see the tech giants in Turkey and he wants to see the jobs that they would create in Turkey. That’s very understandable. He could even have U.S. backing for this claim. I also wish that we could have their headquarters in Turkey. But first we should consider if it is just about the money, and then we should ask ourselves if we want companies to be present in our country just for the sake of lower interest rates if anything below 0.005 percent is even possible.
Ireland has a very strong IT infrastructure; it also offers human resources throughout Europe. Living standards are very high in Ireland and they have a stable economy and stable political climate. This makes Ireland much more competitive than Turkey.
We should consider our pros and cons and act accordingly. I am sure that if we really want and work for it, we could one day become a country that could attract IT companies, too.