​Apple may pay 'material' amount of tax back to Ireland

Apple has given investors the heads up that it may be forced to pay a "material" amount of tax back to Ireland if the European Commission finds the company guilty of striking up special tax deals with the Irish government.

The tech giant said in its quarterly filing with the Securities and Exchange Commission that it may be required to pay up to 10 years' worth of tax if the European Commission rules against Ireland.

"While such [an] amount could be material, as of March 28, 2015, the company is unable to estimate the impact," Apple said.

The company provided a similar warning to investors during its annual filing last October.

Apple also cautioned that it may be subject to changes in its tax rates if it adopts new US or international tax legislation, such as in Ireland.

"The company's future effective tax rates could be affected by changes in the mix of earnings in countries with differing statutory tax rates, changes in the valuation of deferred tax assets and liabilities, or changes in tax laws or their interpretation, including in the US and Ireland," it said.

Apple continued: "If the company's effective tax rates were to increase, particularly in the US or Ireland, or if the ultimate determination of the company's taxes owed is for an amount in excess of amounts previously accrued, the company's operating results, cash flows, and financial condition could be adversely affected."

The European Commission launched an initial investigation into Apple's tax arrangements in Ireland in June 2014, looking at whether the company's 2 percent tax rate in Ireland -- far less than the standard 12.5 percent corporation tax in Ireland -- amounted to illegal state aid under European law.

Specifically, the investigation looked into whether there were transfer pricing agreements between Apple and the Irish government that lasted between 1991 and 2007.

Despite investigations, Apple maintained that it complies with European tax laws.

"The company believes the European Commission's assertions are without merit," it said in its filing.

In September 2014, the European Commission published a letterto the Irish government stating that it was of the view that Ireland's tax rulings of state aid was not permitted under European law.

Meanwhile, Ireland's Finance Minister Michael Noonan said the government is committed to phasing out the loophole -- dubbed as the "Double Irish Dutch Sandwich" tax scheme -- within Irish tax laws that enable companies such as Apple to avoid paying corporate tax.

In Australia, Apple is currently being audited by the Australian Taxation Office, after the federal government called the company out for employing the so-called Double Irish Dutch Sandwich method, where it funnels money through countries outside of Australia to pay very low taxes domestically, despite significantly high revenue from the companies' sales in Australia.

Apple's Australia managing director Tony King said while giving evidence recently at a Senate inquiry into tax avoidance that Apple Australia is entirely owned by Apple Ireland, but insisted that the company does pay tax in Australia, and claimed not to know of the Double Irish Dutch sandwich process.

Earlier this year, Apple reported that it paid more than double in income tax payment for the 2014 financial year. During 2013, Apple had only paid AU$36.4 million compared to 2014, when income tax was AU$80.3 million.

This was an improvement from Apple's tax contribution in 2012, when it decreased to AU$40 million from AU$94.7 million in 2011.