The Americans invent, the Chinese scale and the Europeans regulate. Others merely consume. For those three players, everyone is pushing. Europe now wants to collect really big, and is asking Apple to pay $14.4 billion in back taxes:

“Europe’s top court has dealt a significant blow to Apple, ruling against the tech giant in a long-standing legal battle over its tax dealings in Ireland…The ruling upholds the European Commission’s original 2016 decision, which ordered Ireland to recover up to €13 billion ($14.4 billion) in back taxes from Apple. The Commission had accused Ireland of providing “illegal” tax benefits to Apple over two decades, enabling the company to pay significantly less tax than it would have under standard EU rules.”

Good People, what are African lawyers doing? If you guys do not have an office, the Ovim Nation has a space we can donate; just stay there and send summons to BigTech. There is a likelihood you can collect for Africa. Europe generates $billions on fines and goal-post shifting back taxes yearly.

LinkedIn Summary: Apple and Google were fined billions by European regulators on Tuesday in two landmark rulings that are seen as a “key victory” for the bloc and its scrutiny of Big Tech. In a case dating back to 2016, the Court of Justice of the European Union ruled that Apple must pay Ireland roughly $14.4 billion worth of unpaid taxes. Meanwhile, Brussels fined Google about $2.6 billion in a seven-year-old case that accused it of “abusing its monopoly power” to best rivals in shopping. The decisions were seen as major tests of the EU’s bid to rein in large tech firms on tax and antitrust matters.

• Apple said Tuesday’s decision effectively enabled the bloc to set “a double tax” on a business already taxed in the U.S.
• Google said it was “disappointed” by the ruling, but that it had already made changes to comply with an earlier decision.
• Google is separately facing allegations from federal prosecutors that it maintains an illegal monopoly on the advertising technology market, in an antitrust trial now underway in Virginia.

Comment on Feed:

Comment 1: Ndubuisi Prof – The conclusion is based on the premise that because EU does something, this must be a lesson for Africa, and in particular Nigeria.

Ireland simply pursued a sovereign approach to having strong ‘Ease to Do business’ credentials.

But it is a member of the EU and Brussels has ruled. It can either abide by the decision or pull out.
Ireland has a former British colonial heritage, not French.

It’s approach is different. Irrespective Britain in no longer in EU, the dynamic of Ireland leaving EU would be like Nigeria deciding to leave ECOWAS.

Moreover everywhere has strong points and weak points and while Nigeria has challenges, this does not mean on all things, EU model is right and Nigeria model is wrong.

Nigeria already has close to the worst ‘Ease to do business’ credentials as any in Africa, and unlike Ireland in EU, it’s position in ECOWAS is not at risk by retaining what small number of policies that are useful, and building upon them to improve its ranking.

Nigeria needs to ignore EU and pay attention to Rwanda. If Goliath had sought advice from David rather than conflict, he may have lived and prospered.

My Response:  Good points. Of course, I wrote in figures of speech. No African country (except South Africa) can modulate the big tech considering how much we make for them.

Europe’s top court has dealt a significant blow to Apple, ruling against the tech giant in a long-standing legal battle over its tax dealings in Ireland.

The decision, issued by the European Court of Justice (ECJ) on Tuesday, concludes a 10-year saga that has put the company’s tax strategy under the microscope. The ruling comes just as Apple was unveiling its latest range of products, including new iterations of the iPhone, Apple Watch, and AirPods, making for a dramatic day in the company’s business calendar.

The ruling upholds the European Commission’s original 2016 decision, which ordered Ireland to recover up to €13 billion ($14.4 billion) in back taxes from Apple. The Commission had accused Ireland of providing “illegal” tax benefits to Apple over two decades, enabling the company to pay significantly less tax than it would have under standard EU rules.

This case has long been emblematic of the EU’s broader push to regulate the practices of multinational tech firms, including in areas such as taxation, data protection, and antitrust.

Apple Responds, Shares Drop

Apple has been steadfast in its defense throughout the years, stating that it complied with all relevant tax laws. In its statement following the ECJ ruling, the company reiterated its position saying, “The European Commission is trying to retroactively change the rules and ignore that, as required by international tax law, our income was already subject to taxes in the U.S.”

This legal setback came at an inopportune time for the company, with Apple’s shares dropping by 1% in premarket trading on Tuesday morning in London, reflecting investor concerns about the ruling’s potential financial and reputational impact. Given the size of the tax bill, the outcome may affect Apple’s broader tax and financial strategies in Europe.

While the ruling puts a spotlight on Ireland’s tax policies, the Irish government has sought to downplay the broader implications, noting that the case pertains to an issue that is now of “historical relevance only.” The Irish government has long maintained that it does not provide preferential tax treatment to any company, Apple included.

However, the ruling reaffirms the European Commission’s stance that Ireland offered Apple a tax advantage that was not available to other companies.

In a statement, Ireland announced that it would begin the process of transferring the assets held in the escrow fund—where the contested €13 billion has been held pending the resolution of the case—back to the Irish state. This move follows the ECJ’s decision, affirming that the funds, which were accumulated as Apple’s unpaid taxes, must now be recovered.

The Road to the ECJ Ruling: A Decade-Long Legal Battle

The legal conflict between Apple, Ireland, and the European Commission dates back to 2014 when the Commission first opened an investigation into Apple’s tax arrangements in Ireland. The investigation revealed that Apple had been benefitting from what the Commission described as “illegal tax benefits,” with two of the company’s subsidiaries allegedly paying an effective tax rate of just 0.005% on their European profits in 2014.

In 2016, the European Commission took a firm stance, ordering Ireland to recover the €13 billion in back taxes from Apple. The Commission argued that Apple had exploited a loophole in Ireland’s tax system to minimize its tax liabilities across the EU, a practice the Commission said was in violation of the bloc’s rules on state aid.

Apple and Ireland both appealed the ruling, arguing that the tax arrangements were in line with international and Irish tax laws. In 2020, the EU General Court, the EU’s second-highest court, sided with Apple and Ireland, annulling the Commission’s decision. The General Court ruled that the Commission had not sufficiently proven that Ireland had given Apple an illegal advantage through its tax agreements.

However, the Commission was undeterred, launching an appeal to the ECJ, the EU’s highest court. The ECJ’s ruling on Tuesday overruled the General Court’s decision, siding with the Commission and re-establishing the claim that Ireland had, in fact, given Apple a tax advantage that contravened EU rules.

EU vs. U.S. Tech Giants

This latest ruling is not an isolated event, but rather a part of the EU’s wider conflict with U.S. tech giants over issues ranging from taxation to data privacy and market dominance. The Apple case began under the leadership of Margrethe Vestager, the EU’s competition chief, who has made it her mission to tackle what she sees as unfair practices by some of the world’s largest corporations. Vestager has been a central figure in the EU’s efforts to hold tech companies accountable, and the Apple case remains one of her most high-profile battles.

The case has also drawn attention to the complex relationship between U.S. companies and European regulators, with many in the U.S. arguing that the EU is unfairly targeting American firms. Meanwhile, the EU has continued to introduce laws aimed at reining in the power of tech giants, with Apple facing fines and investigations under new legislation like the Digital Markets Act (DMA).

In fact, Apple has been the subject of several antitrust investigations in Europe. Most recently, the company was hit with a €1.8 billion ($1.99 billion) fine in March for allegedly abusing its dominant position in the distribution of music streaming apps. The company is also facing ongoing scrutiny under the Digital Markets Act, a sweeping piece of legislation designed to regulate the behavior of the world’s largest tech companies, known as gatekeepers.

Both Apple, Alphabet (Google’s parent company), and Meta (Facebook’s parent company) are among the firms being closely monitored under this law, which aims to prevent monopolistic behavior in Europe.

Implications of the Ruling

The ECJ’s ruling against Apple sends a strong message to multinational corporations about the importance of complying with EU tax laws and state aid rules. For Apple, the ruling may represent a considerable financial setback, as it now has to pay €13 billion in back taxes. But beyond the immediate financial implications, the ruling reinforces the EU’s commitment to holding large corporations accountable for their tax practices, regardless of their size or influence.

As for Apple, this may not be the last time it finds itself in the crosshairs of European regulators. With ongoing investigations under the Digital Markets Act, as well as existing antitrust probes, the company could face additional fines and restrictions on its operations within the EU.

In a recent economic projection, prominent Nigerian economist and Chief Executive Officer of Financial Derivatives Company Limited (FDC), Mr. Bismarck Rewane, has warned that the latest surge in petrol prices, which saw an increase of 50.1% from N568 to N855 per liter, would have profound consequences for Nigerian consumers.

Speaking during his monthly presentation at the Lagos Business School (LBS) Breakfast, titled, “All That Glitters are Not Gold,” Rewane noted that this price hike is likely to worsen the country’s energy poverty crisis, drawing N5 trillion from consumers to the government’s coffers.

“The macroeconomic and welfare impact of the new petrol price implies that N5 trillion is withdrawn from consumers and transferred to the government,” Rewane explained.

He added that this shift would likely exacerbate energy poverty in the nation, predicting that the number of Nigerians trapped in energy poverty will rise from 161 million in 2023 to 168 million by 2025.

Though Rewane acknowledged that the price increase could potentially strengthen the naira as liquidity diminishes, he cautioned that this might come at the expense of social stability.

“Exchange rate could strengthen as liquidity decreases and fiscal deficit declines, but this price hike may instigate social unrest as citizens react in frustration,” he stated.

The price jump, according to Rewane, could also drive re-inflation, particularly as logistics costs skyrocket and consumer demand declines due to shrinking household income.

In addressing possible relief for consumers, Rewane pointed to the commencement of petrol production by the Dangote Refinery, which could help alleviate supply challenges. However, he noted that the price of petrol will still largely depend on global crude oil prices.

“The start of petrol production by Dangote refinery will offer relief to consumers by addressing the supply challenges and guaranteeing quantity and quality of refined products, but not the price,” Rewane said.

He further explained, “No producer will sell below its production cost, and the domestic price of petrol depends on the global price of oil.”

The economist also predicted that the smuggling of petrol to neighboring countries within the Economic Community of West African States (ECOWAS) would reduce once the Dangote Refinery began production, as the refinery would be able to sell directly to these nations.

“Nigeria’s demand for PMS will stabilize at 35 million liters per day,” he projected, further suggesting that the refinery’s operations would improve supply and alleviate fuel scarcity.

He delved into the broader economic implications of these developments, stressing that the Dangote Refinery’s operations could boost Nigeria’s GDP and aggregate output. Additionally, Rewane highlighted that the increase in petrol supply could eliminate long queues at filling stations, improve the quality of fuel, and bolster employment opportunities.

“The macroeconomic impact of the Dangote refinery will include an increase in petrol supply, elimination of petrol queues, improvement in quality of petrol product, increased GDP output, and improved balance of trade,” he noted.

However, despite the potential benefits, Rewane warned that the inflationary pressures resulting from the recent petrol price increase could prevent the Central Bank of Nigeria (CBN) from reducing interest rates anytime soon. He commented on the analysts’ expectations of monetary easing after the 850 basis points hike in the Monetary Policy Rate (MPR), saying, “The petrol price spike will renew inflationary pressures. Therefore, analysts’ expectations for a slash in interest rate will have to wait until January 2025.”

Rewane also pointed out that Nigeria’s structural challenges continue to drive inflation, and fiscal policies are required to address these issues.

“Fiscal policies are also needed to tackle structural inflation drivers, such as insecurity, infrastructure deficiencies, and import dependence,” he advised.

His assessment of the current economic landscape suggested that Nigeria’s GDP numbers might not fully reflect the realities on the ground, particularly about employment and productivity.

He highlighted that only 27.74% of GDP activities expanded in Q2 2024, while 54.35% slowed and 23.91% contracted. This sluggish growth, he argued, has grave implications for employment opportunities, especially in labor-intensive sectors.

“Sectors that expanded in Q2’24 are mainly labor inelastic sectors,” Rewane explained.

He added that manufacturing, agriculture, construction, real estate, and trade all slowed in Q2 2024 compared to the same period in 2023.

“The economic implications are reduced employment opportunities, slower economic growth, supply chain disruptions, increased import dependency, and rising inequality,” Rewane remarked, outlining the challenges facing the Nigerian economy as it contends with rising inflation and reduced productivity.

On the issue of electricity generation, Rewane projected a positive outlook, stating that increasing Nigeria’s electricity generation to 6,000 MW from the current 4,000 MW within the next six months would lead to significant improvements in economic stability and industrial output.

“A 1,000 MW increase in power generation will lead to a 0.5% rise in GDP,” Rewane predicted, highlighting the potential for enhanced foreign direct investment (FDI), job creation, and productivity gains across the country.

“Consumers will benefit from reliable access to electricity, decreased cost of generator use, improved comfort, and increased disposable income,” he added.

How Much Will Dangote Refinery Sell Fuel?

Despite widespread expectations that the Dangote Refinery would help reduce fuel prices in Nigeria, recent events and prevailing market realities indicate otherwise. Initial hopes hinged on the refinery’s capacity to produce domestically refined fuel at a cheaper rate, providing much-needed relief to consumers.

However, emerging trends suggest that the refinery is likely to sell petrol at over N1,000 per liter once it begins full operations. This possibility has further dampened expectations, as Nigerians continue to grapple with rising energy costs.

While President Bola Tinubu has directed the Nigerian National Petroleum Company Limited (NNPCL) to supply crude oil to the Dangote Refinery in naira—bypassing the foreign exchange cost that has previously inflated production expenses—the refinery’s current stock was purchased in dollars. This means that its pricing structure is still heavily influenced by international market forces.

Analysts predict that the refinery will price its products accordingly, reflecting global crude oil prices rather than domestic conditions. With this in mind, the refinery’s operations may not immediately translate into lower prices for Nigerian consumers.

In the coming months, the reality of these dynamics is expected to unfold, leaving Nigerians bracing for the possibility of higher petrol prices, despite the much-anticipated boost in local fuel production.