The EU has made it abundantly clear that U.S. tech companies have had their last sip of the Double Irish and their last bite of the Dutch Sandwich. Some EU politicians have proposed a minimum business tax that raises the tax burden of foreign companies overall and levels the playing field throughout the EU.
But don’t think for a moment that the EU is done with taxes. They aren’t. AppleInsider reports that the “UK government plans ‘Digital Services Tax’ applied against Apple and other tech giants.”
“Announced by UK chancellor Philip Hammond at the House of Commons on Monday, the Digital Service Tax is being billed as a way for big firms to pay their fair share, or as the ‘Budget 2018’ report advises, will ‘ensure that the amount of tax paid in the UK is reflective of the value they derive from their UK users.'”
This is not a sales tax on goods and services that is any way visible to the end user. It is strictly a corporate tax. It is a 2 percent tax on search engines, social media platforms, and online marketplaces. The tax will only affect large businesses that make $640 million a year.
The entire proposal rings with the slogan of global giants paying their “fair share.” However, one’s fair share is always a moving target. Not one of the companies targeted by these taxes has ever been accused of violating any tax law in any country. They have complied with the law, even when those laws changed to create a retroactive tax debt.
EU tax maneuvering is not the only pressure on Apple product pricing. The trade situation with China is set to get worse for tech firms. They were exempt from the last round of Chinese tariffs. The new word on the street is that everything imported from China will be subject to tariffs including the products of tech companies.
Apple seems to have been planning for this eventuality for some time. In September, Apple raised the prices on Apple Watches across the board. The higher prices are also seen in the iPhone lineup. There is no new phone starting for less than $750. That is $100 more than the traditional base price.
Going back a couple of years, the price of the MacBook Pro also increased and has remained at the higher price point since then. Later today, Apple is set to address the low-end of the lineup by introducing a new mainstream laptop. There is a good chance that the new price pressures will continue to have an effect on Apple product pricing for the foreseeable future.