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Apple accused of large scale tax avoidance

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23rd May 2013
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Global technology giant Apple came under fire from the US senate this week, as it was accused of large scale tax avoidance

Chief executive Tim Cook appeared before a senate committee to defend his company’s tax practices, including a 2% corporation tax rate deal it struck with the Irish government on two of its subsidiaries.

Apple has a number of subsidiaries in Ireland, including financial services, distribution and manufacturing and has been there since the 1980s.

The report accuses Apple of avoiding tax on US$74bn of overseas profits held offshore in the last four years, accounting for 61% of its earnings.

Appearing before the senate, Cook claimed in his pre-written testimony that Apple is one of the US’s biggest taxpayers, contributing US$6bn to the American treasury in taxes last year at a tax rate of 30.5%.

He added that Apple did not use “tax gimmicks” such as holding its intellectual property offshore or using complex transfer pricing structures.

Money made outside the US was “taxed in the local market”, he said, before being transferred to Apple Operations International, registered in Ireland but controlled in the US.

Because of this, AOI is considered tax resident in either the US or Ireland.

The senate maintains however that Apple is one of the biggest US tax avoiders, dodging an estimated US$44bn of tax in the last four years.

Apple has a cash stockpile of US$145bn, but the report said that US$102bn of this is currently held offshore.

One of the company’s tax avoidance schemes included incorporating their overseas holding companies in Ireland. US taxes are based on where the companies are incorporated, while Ireland taxes the company on the basis of where they are managed.

Therefore, this enabled to make them “stateless” and exempt from the need to file a tax return anywhere.

The Irish government was also accused of facilitating such avoidance by the committee, but defended themselves, saying the issue was not a result of the country’s tax regime.

More recently, the country has also called for collaborative international action on tax avoidance with the OECD.

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By Roland195
24th May 2013 14:11

If in doubt, blame the Irish

2013 and the US still tries to blame the Irish:

Abe Simpson: "The last time the meteors came, we thought the sky was on fire. Naturally, we blamed the Irish. We hanged more ‘n a few".

 

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By david5541
29th May 2013 13:11

the irish also house Google for the same tax reasons-and such a

 

low rate of ct!

Roland195 wrote:

2013 and the US still tries to blame the Irish:

Abe Simpson: "The last time the meteors came, we thought the sky was on fire. Naturally, we blamed the Irish. We hanged more ‘n a few".

 

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By david5541
29th May 2013 13:09

the luck of the irish(and dutch)

"APPLE - One of the company’s tax avoidance schemes included incorporating their overseas holding companies in Ireland. US taxes are based on where the companies are incorporated, while Ireland taxes the company on the basis of where they are managed." """

maybe its time the IRS and HMRC came down heavy on the irish with a dividend/interest payments surcharge for any payments made to ireland and other tax haven nations- this would be more politically unacceptable than the USA bank rolling the israelis-as they do anyway....

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