Apple could owe more than $8 billion in back taxes as a result of a European Commission investigation into its tax policies, according to an analysis by Bloomberg Intelligence.
The investigation revolves around a deal the Irish government made with Apple, offering a 2.5% corporate tax rate if the company would base its European operations in Ireland instead of the usual 12.5% corporation tax. Apple hasn't done anything illegal by taking up the deal; the Irish government offered illegal state support to a business, something that is against EC business and taxation regulations.
However, if the investigation concludes that the deal is illegal, then Apple would need to pay back taxes accrued over the past 10 years. Similar arrangements that were made with Starbucks and Fiat in Luxembourg and the Netherlands have been ruled illegal. Apple has said it will appeal an adverse ruling.
CEO Tim Cook has denied that the company uses tricks to avoid paying taxes. In a recent interview on 60 Minutes, he called the criticism the company has faced from U.S. lawmakers "political crap." He said the tax system is outdated and needs to be updated for a digital economy.