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Apple Could Owe More Than $8 Billion in European Tax Probe
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Is it moral when a government spends more than it take in, and then borrows the rest? The US has a total debt of nearly $19 trillion dollars, and that doesn't include the unfunded liabilities like pensions. Who is going to pay that? The young kids, many here on this board, as well as kids not yet born. They're going to get stuck with this sooner or later, and its going to reduce their quality of life.
So spare me your faux morality lesson. If Apple played straight with the laws, leave them alone. Otherwise fine them. But don't for a second call what they are doing immoral. Look to your government and call their financial situation immoral, because it really is.
I understand EC. I also want to have a piece of of that $8BN. Apple has likely been following all regulations and paid every taxes due on time. Question is not the interpretation of the tax codes. There is money sitting there. You will lose dignity but someone will take it if you don't.
Maybe I want to try and start my own multi-billion dollar company, and if I succeed, not have laws that allow bureaucrats from bunch of different governments take more massive gobs of cash away from me? If you want to be a poor unsuccessful drone the rest of your life, many think that that is just as nutty.
You're all talking as if taxes are some brand new thing people are trying out, and that it's keeping businesses from being as successful as they were previously. That they're some massive yoke our poor multi-billion dollar industries are suffering under, imposed upon them by a bloated government.
You might have a point if it weren't for the fact that corporate taxes were actually higher in the past than they are now.
Their tax obligation is what is required by law (same for their Irish subsidiary). How many of you send in a bunch more tax money than your tax accountant (or MacInTax, etc.) says you owe by law?
Admittedly, blaming the corporations for using entirely legal tax loopholes is trying to treat the symptom while ignoring the disease.
But at the same time, it'd be nice if I had as much influence in government, and could get my tax burden as low as the corporations do.
There are people in some countries that pay a far higher tax rate than you do. Do you feel immoral paying less? Or do you send in extra money to your government?
Comments like this make me laugh. This has nothing to do with timezones, it's all about looking for a tax haven.
TZ difference between NY and Dublin = 5 Hours
TZ difference between NY and Sydney = 6 Hours
You know the saying, "If You Are Not a Liberal at 25, You Have No Heart. If You Are Not a Conservative at 35 You Have No Brain ". Ascribed to the 1875 French book of contemporary biographical portraits by Jules Claret.
I would feel definitely immoral if I were able to live and earn money in a country and pay taxes in a different country instead. On top of that, it's usually illegal for a person to claim a fake abroad residence to avoid taxes in the actual country of residence.
Apple is a serial tax cheat. Its cheating every country of taxes including those in the EU and the United States. Apple should be very glad the EU doesn't have the punative fines that apply in the US as the total bill would be materially higher.
For all it's Product Red iniatives the fact is Apple have hidden some $200bn in profits globally from tax.
For all it's Product Red iniatives the fact is Apple have hidden some $200bn in profits globally from tax.
Well said. Like Apple, I look for all possible (legal) ways to lower my tax bill. As long as Apple isn't breaking the law, then I have no problem with what they are doing. If you don't like it, then lobby the politicians to fix the byzantine tax codes that allow Apple to do things like this.
Indeed.
Apple, Google, Microsoft, Facebook .... all playing the same dirty game in ireland and luxemburg.
This must come to a stop.
And Ireland government should be fined for the same reason.
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Google and Facebook are good examples...
It doesn't take an expert to understand the shameful behavior of Ireland and Apple here.
Ireland and Luxembourg are tax havens.
This must be stopped , or they must go out of EU...
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it wasn't Cook to set the 1.8%
It was Ireland government, to give a sense to an otherwise very minor country (economically speaking)....
Thing now is that they keep the money in Ireland, as they must be paying like 3% of taxes, apart from the 21% of each sale.
For comparison, I am a one man company, i gotta pay that 21% for each sale, and then 35% of my profit... 35%%%!!!! and if things get better, I will pay 50% from my profit, and that does not include any pension for me!!!!
Apple, google, starbucks, and many other companies get agreements with the governments of netherlands, luxemburg, ireland, gibraltar, switzzerland, to get a very very very low tax, less than 5%. Apple is not breaking the law, it'sthe governments in these countries who create these low tax rules. Switzzerland is the money laundry of all corrupted europeans. Yes, switzzerland, and the same with luxemburg. Ireland is a saint in comparisson, and still they do this ****...
Apple just do what any big company does; get the best deal legal deal, and hire tons of lawyers, lobbysts and financial engineers...
Yes...the original OP/article was not exactly accurate to explain Apple's taxes which is essentially called as a strategy while it is legal in other countries but Apple is not the only organization. Microsoft, Facebook, Google, Starbucks and many others...
To clarify, Apple's strategy is technically called as "International Transfer Pricing" and they are taking advantage of Ireland and Netherlands tax laws. It is called as a "double Irish with a dutch sandwich". Nobody can point fingers at Apple because they are not the only one. Some say call it tax evasion but it's based on organizations' subsidiaries in Ireland and Netherlands to make it legal for them.
Forgetting Microsoft?
According to Hickey (2013), “Microsoft [is] doing what nearly every other major technology company does”. Microsoft is absolutely guilty from legally evading taxes from loopholes such as the Double Irish with a Dutch Sandwich. “Numerous companies take advantage of loopholes in international laws to move profits around the world, avoiding taxes [and] many of these techniques rely on transferring profits on patent royalties to places like Ireland” (NY Times, 2012). These tactics are clearly not currently enforced in Ireland, Netherlands, or Bermuda (Drucker, 2010). Microsoft managed to cut their taxes to single digits by maintaining an Irish subsidiary and also being designated as a Bermuda resident (Wood, 2014). According to Hickey (2013), “The Senate investigation found that Microsoft reduced its 2011 federal tax bill by a whopping $2.43 billion — or 44 percent — by using a wide, international network of controlled foreign corporations and the exploitation of various loopholes in the U.S. corporate tax code”. These tactics are currently legal but the loopholes are slowly being closed down. According to Wood (2014), “The double Irish [was closed] as of January 2015, but companies in place can keep their structures until December 31, 2020” (Wood, 2014). Ireland will still be one of the lowest tax rates in the world of 12.5% (Phillips, 2014).
Thinking about Ethics?
According to Drucker (2010), “If the tax avoidance structures are legal, not everyone considers them ethical”. It is difficult to say if these strategies are ethical or not but if any of these firms that use the Double Irish with a Dutch Sandwich could be considered more ethical if they repatriate some or all of their funds from offshore tax havens because they would be taxed in the U.S. I cannot simply blame any of these firms because the loopholes are open to allow tax avoidance. I am unsure if Choi actually finds transfer pricing as ethical because he only explained the advantages. On the other hand, I feel that Choi finds transfer pricing unethical after he explained a number of issues with transfer pricing. “The significance of the issue is obvious when we recognize that transfer pricing (1) is conducted on a relatively larger scale internationally than domestically, (2) is affected by more variables than are found in a strictly domestic setting, (3) varies from company to company, industry to industry, and country to country, and (4) affects social, economic, and political relationships in multinational business entities and, sometimes, entire countries. International transfer pricing is the most important international tax issue facing MNCs today” (Choi, 2011, p. 447).
References
Choi, F., & Meek, G. (2011). International accounting (7th ed.). Upper Saddle River, N.J.: Pearson Prentice Hall.
Drucker, J. (2010, October 22). ‘Dutch Sandwich’ saves Google billions in taxes. Bloomberg Businessweek. Retrieved August 11, 2015, from http://www.nytimes.com/interactive/2012/04/28/business/Double-Irish-With-A-Dutch-Sandwich.html/
Hickey, W. (2013, May 21). It’s not just Apple: The ultra-complicated tax measures that Microsoft uses to avoid $2.4 billion in U.S. taxes. Business Insider. Retrieved August 11, 2015, from http://www.businessinsider.com/apple-microsoft-avoids-taxes-loopholes-irs-2013-1
NY Times. (2012, April 28). Double Irish with a Dutch sandwich. New York Times. Retrieved August 11, 2015, from http://www.nytimes.com/interactive/2012/04/28/business/Double-Irish-With-A-Dutch-Sandwich.html/
Phillips, K. (2014, October 15). Ireland declares ‘Double Irish’ tax scheme dead. Forbes. Retrieved August 11, 2015, from http://www.forbes.com/sites/kellyph...reland-declares-double-irish-tax-scheme-dead/
Wood, R. W. (2014, October 14). Ireland corks Double Irish tax deal, closing time for Apple, Google, Twitter, Facebook. Forbes. Retrieved August 11, 2015, from http://www.forbes.com/sites/robertw...osing-time-for-apple-google-twitter-facebook/
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I'm going to guess that your one man company is put in the US and only earns money in the US. Apple pays similar taxes on the money they earn by selling product in the US, so in that they don't have much of an advantage (they probably have higher paid tax experts so might find more deductions, granted). This is only for sales in Europe.
If you could get a tax deal, are you saying you wouldn't take advantage of it?
That seems like an atypical tax model. May I ask what country you operate in? I've never heard of a tax of 21% on gross receipts.
I can tell you now, the timing is not suspicious, what happened was that the tax dodging became widespread public knowledge and the politicians were forced to react, they were reminded they work for the people I guess? As the public were unsurprisingly none too happy, considering they pay high taxes and giant international corporations pay peanuts.
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