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EU's Vestager seeking details on Apple's recent tax set-up

09 November 2017

Apple quietly sidestepped a crackdown on its much-maligned Ireland tax avoidance practice by moving its overseas operation to the tax haven of the Channel Island of Jersey, documents leaked from an offshore law firm revealed.

Coverage of the documents is being coordinated by the International Consortium of Investigative Journalists, which has shared them with major media outlets including The New York Times, The Guardian and the BBC.

The previously undisclosed story of Apple's search for a new island tax haven and its use of Jersey is among the revelations emerging from a cache of secret corporate records from Appleby, a Bermuda law firm that caters to businesses and the wealthy elite.

Specifically, to avoid paying $9 billion in USA corporate taxes in 2012, Apple allegedly used a strategy that involved rapid transfers of cash between three offshore units with no tax "residence".

Over the past three years, Apple has reported paying very low tax rates on its profits outside the United States – not much more than previously.

By 2015, Apple had moved the tax home of two Irish subsidiaries to Jersey, a self-governing island in the English Channel, and also made Ireland the tax home of a different European subsidiary.

Apple's 2017 accounts showed they made $44.7 billion outside the USA and paid just $1.65 billion in taxes to foreign governments, a rate of around 3.7 per cent - less than a sixth of the average rate of corporation tax in the world. It said it pays an effective tax rate of 21 per cent on foreign earnings.

Apple didn't immediately comment to The Associated Press.

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Apple has said that its arrangements are legal and it pays all the taxes it owes. That is less than a sixth of the average rate of corporation tax in the world.

Apple on Monday responded to the claims, suggesting that the move was part of its corporate restructuring to comply with Ireland's rules and to ensure that "tax obligations and payments to the U.S. were not reduced".

It was May 2013, and Apple CEO Cook appeared before a Senate investigative subcommittee.

It looked for a country with low taxes, discretion, and a stable political environment.

"As the largest taxpayer in the world we've paid over $35 billion in corporate income taxes over the past three years, plus billions of dollars more in property tax, payroll tax, sales tax and VAT".

The company has written on its website that they have the dignified economic contributions to the communities and countries where they do their business.

Apple was told to pay Ireland €13 billion (£11.6 billion) in unpaid taxes last August, for example, while Google was ordered to pay €2.4 billion (£2.1 billion) in June or promoting its Google Shopping results above similar comparison results from rivals. Ireland and Apple launch an appeal. Apple insists that the new structure did not lower its taxes.

Cupertino also claims that it remains the world's biggest taxpayer, and says that its move to Jersey was to comply with the new Irish laws, and was not intended nor has in fact created a tax benefit for the firm.

EU's Vestager seeking details on Apple's recent tax set-up