Apple Inc. (NASDAQ:AAPL) established itself as a household name once it released the iPod in the early 2000s and quickly took over multiple markets, making it nearly impossible to go an entire day without coming across an Apple product. This week, as several major developments have come to pass for the tech giant, Apple finds itself taking over the news once again.
This past Tuesday, the EU handed Apple a $14.5 billion tax demand to Ireland for unpaid taxes. This is the largest tax ruling that the EU has ever given to a single company. Ireland has one of the lowest corporate tax rates in Europe, making it an attractive destination for global companies like Apple, that in turn bring s global investments and jobs into the country. Apple paid taxes of 1%, or less, on profits attributed to its subsidiaries in Ireland. This is well below the 35% top rate of corporate tax in the United States and Ireland’s 12.5% rate.
Commissioner Margrethe Vestager, Europe’s top antitrust official stated that, “[EU] member states cannot give tax benefits to selected companies — this is illegal under EU state aid rules,.” Apple and Ireland both intend to appeal this decision with Ireland claiming that Apple paid exactly what was owed to the country. Tim Cook, CEO of Apple, explained that the EU’s ruling has, “no basis in fact or law” and that it is trying to “rewrite Apple’s history in Europe, ignore Ireland’s tax laws and upend the international tax system in the process.”
Apple would have no problem paying the $14.5 billion fine, as it accounts for just 6% of the $231 billion Apple has in cash and investments. Officials in the U.S. fear that this decision could lead to unwillingness by companies to do business in Europe. A U.S. Treasury spokesperson was quoted saying that, “The Commission’s actions could threaten to undermine foreign investment, the business climate in Europe, and the important spirit of economic partnership between the U.S. and the EU.” It is expected that the appeals process could take several years.
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The other major news development that came out this past week was Apple’s invitation for its event on September 7th in San Francisco. It is rumored that Apple is going to release several new products, with the iPhone 7 being the focal point. It has become an annual ritual for the tech world to turn its attention to Apple in September to see the new iPhone features Apple has in store.
While experts aren’t anticipating seeing any groundbreaking new features, which they believe will arrive next year, the rumored incremental changes will not be insignificant. The change sparking the most discussion will be the removal of the headphone jack, having the headphones and charger both inserted into the current charging port. It is also rumored that the iPhone will have advanced camera technology, including a dual-camera system that will provide better performance in low-light settings and improved color fidelity. Lastly, Apple will remove the home button, opting to utilize a series of sensors that will vibrate when pressed, innovatively prioritizing the display screen.
Recently talks have indicated that Apple may use this opportunity to release a new Apple Watch and MacBook. It has been 18 months since the rollout of the original watch and many expect it may be time to unveil the 2nd edition. Experts say we may see faster internals, improved battery life and the addition of GPS functionality. Per the rumor mill, Apple’s next-gen MacBook Pro will feature an OLED touch panel and Touch ID functionality. Specifically, the OLED touch panel is said to replace the function key row and will feature options that will dynamically change depending on whatever app happens to be in use.
The release of the new iPhone is crucial for Apple. Analysts have expressed widespread concerns that consumers are not upgrading their iPhones as often as they once did before. While investors were pleased to see Apple beating expectations this past quarter, selling 40.04 million iPhones, analyst’s estimates have been low lately due to a lack of demand. The 40.04 million iPhones sold by Apple this past quarter is well below its peak of 74.48 million phones in the first quarter of 2016. While part of this decline can be attributed to the upgrade cycle, there is no doubt that Apple is desperate for its new phone to be well received to spark demand.
“See you on the 7th.”