Apple 'among largest tax avoiders in US'

mondeo123 · 21-05-2013, 12:39

http://www.bbc.co.uk/news/business-22600984

http://news.sky.com/story/1093691/ap...ance-questions

finbaar · 21-05-2013, 12:55

Governments need to act as one to avoid these sort of practices. Companies are almost obliged to pay the lowest tax possible to maximise profits as part of the capitalist system.

enapace · 21-05-2013, 13:14

This has been obvious for years only reason it come up now is because they did that deal to gather funds instead of bringing in those funds from there off shore back accounts.

McTeagle · 21-05-2013, 13:55

Apple has made those profits offshore, and US tax is not due unless they bring those profits back into the US - which they are absolutely under no legal obligation to do.

Quote:

In its report into Apple, committee chairman Carl Levin said: "Apple wasn't satisfied with shifting its profits to a low-tax offshore tax haven."

No, it wasn't - because Apple has not done this.

"Shifting profits" means moving profits out of the US. They just happen to be making a lot of profits outside the US as well as within it.

Quote:

Companies are almost obliged to pay the lowest tax possible to maximise profits as part of the capitalist system.

So people who have shares shouldn't expect a maximum possible return on their money? So much for pension funds then...

Who on earth voluntarily pays tax that isn't due? Or maybe I'm wrong and people are gladly handing over their own money to the Treasury due to a shared sense of responsibility.

Or maybe not...

https://www.whatdotheyknow.com/reque...4%20070404.pdf

Rodney McKay · 21-05-2013, 14:54

The problem is Ireland that offers much lower rates of corporation tax than other EU states, a bit rich when it has had to be bailed out by the likes of the UK.

calico_pie · 21-05-2013, 15:11

The problem is the game, not the players.

The only reason Apple is one of the largest, is because it is raking in the most revenue.

So its also about the biggest tax payers in the US. 1/40th of all corporation tax collected in the US last year was paid by Apple, and they now employ around 600,000 people in the US.

There clearly is a problem due to historical loopholes, but the solution isn't to use ordinary tax payer's money to go after a few big companies, who have not broken any law, but rather is for governments to co-operate and close the sort of loopholes that make it all possible.

*MikeB* · 21-05-2013, 17:57

Quote:

Originally Posted by Rodney McKay

The problem is Ireland that offers much lower rates of corporation tax than other EU states, a bit rich when it has had to be bailed out by the likes of the UK.

The UK selectively chose to bail out Ireland (we haven't bailed out everyone, as we are not part of the Euro). I believe we did this because the Irish economy will be very strong. It should be, so many companies are based there and it does have an awful lot of talent in the technology sector. We will get our money back plus a decent bit of interest.

If it wasn't for all those many houses that were built unnecessarily and of course the global economic slump, Ireland would be a great economy right now. It'll always be a far smaller economy than the UK though, partly due to a much smaller population.

Everything Goes · 21-05-2013, 18:09

Tim Cook does a nice sales pitch for Apples "Innovative" products at the end and has a fly swipe at their competitors hes probably thinking of Samsung!

http://www.bbc.co.uk/news/business-22615146

wavejockglw · 21-05-2013, 19:06

Apple look to be in for a hammering both for their tax avoidance and their hardware specifications. They have been the kingpin for a long while and have become complacent and are about to get a hard kicking from the competition because they have been greedy and used litigation to stifle innovation and governments don't like arrogant companies that make billions and put little back in terms of contribution to the National tax system.

Apple are rapidly falling out of favour as can be seen by their products competing at much lower price points. The fruit no longer commands the biggest price premium because it no longer is the most innovative product available and there is little evidence that Apple have any ideas for future products that will generate big premium price tags from aspirational customers.

The Lord Lucan · 21-05-2013, 20:20

Most of the money is made and spent abroad so the question is ... why does the US goverment think it is entitled to it.

I think having so many retail stores with tax paying employees, data centres, manufacturing of two updated models (do Samsung etc do builds in the US at all??) and that a lot of the components that are made in the US + that they still are paying tax is quite enough..

paulbrock · 21-05-2013, 20:24

what I don't understand is what the committee call the "holy grail of tax avoidance" - the claim that Apple's tax paying subsidiaries are set up in a way, not that they pay e.g. Irish tax, but that they were tax resident nowhere.

Stuart_h · 21-05-2013, 22:39

Much as i dislike Apple they are doing the same as most other multinational companies. These companies spend fortunes on accountants to minimise their tax liabilities.

Its a good job too as Apple is then able to pass on all those savings to consumers ..... oh .... hang on a mo .....

(obviously i couldn't resist the last bit but the first bit is legit

)

The Lord Lucan · 22-05-2013, 00:03

Senator Rand Paul's opening statement.. Wow!

"Tell me a politician who is up here and doesn't try to minimize his taxes… Tell me what Apple has done is illegal. I am offended by a government… that convenes a hearing to bully one of America's greatest success stories… If anyone should be on trial here, it should be Congress. I frankly think the committee should apologize to Apple."

Instead of Apple executives, we should have brought in a giant mirror. This problem is solely and completely caused by our tax code. This committee should look in the mirror. "I find it abominable."

We need to apologize to Apple, compliment them for the job creation they're doing, and get on with our job and redo the tax code."

I agree especially seeing they have created or currently support around 600,000 jobs in the United States, I think it's daft to investigate them.

paulbrock · 22-05-2013, 00:07

is job creation a suitable substitute for corporation tax? (I believe Google used the same argument in the UK hearing)

PPhilster · 22-05-2013, 02:03

Quote:

Originally Posted by The Lord Lucan

Senator Rand Paul's opening statement.. Wow!

"Tell me a politician who is up here and doesn't try to minimize his taxes… Tell me what Apple has done is illegal. I am offended by a government… that convenes a hearing to bully one of America's greatest success stories… If anyone should be on trial here, it should be Congress. I frankly think the committee should apologize to Apple."

Instead of Apple executives, we should have brought in a giant mirror. This problem is solely and completely caused by our tax code. This committee should look in the mirror. "I find it abominable."

We need to apologize to Apple, compliment them for the job creation they're doing, and get on with our job and redo the tax code."

I agree especially seeing they have created or currently support around 600,000 jobs in the United States, I think it's daft to investigate them.

Exactly. If I were Tim Cook I never would have even shown up. At most, I would have said lower you corporate taxes to a competitive level and maybe I'll think about paying them.

rosetech · 22-05-2013, 07:15

Quote:

Originally Posted by The Lord Lucan

Most of the money is made and spent abroad so the question is ... why does the US goverment think it is entitled to it.

The yanks have a dual taxation policy, essentially we get a cut if you are an american company.

I have no love for Apple - but they are not a charity, why would they not minimise your tax burden? The employ loads of people, they pay loads of tax, they contribute significantly to the economy.

If it is as wrong as the MP's and Senators are making out, do your job and change the law

I suspect as always it merely a diversion tactic - UK pay rise for MPs anyone.

rosetech · 22-05-2013, 07:28

Quote:

Originally Posted by paulbrock

is job creation a suitable substitute for corporation tax? (I believe Google used the same argument in the UK hearing)

Google UK have restricted any sales occurring in the UK which substantially reduces their tax burden. Guess what all companies do that. Do UK pay sales tax in other countries - nope they seek out the most efficient planning for their business - as a shareholder you would be outraged if the manager of your business provide the maximum it could to the government. You plan you tax to suit your business, if you are a multinational why would you put your cash where it will be reduced. Does anyone here contribute to a pension or charities - it reduces your tax burden, is that wrong too?

calico_pie · 22-05-2013, 11:04

Quote:

Originally Posted by wavejockglw

Apple look to be in for a hammering both for their tax avoidance and their hardware specifications. They have been the kingpin for a long while and have become complacent and are about to get a hard kicking from the competition because they have been greedy and used litigation to stifle innovation and governments don't like arrogant companies that make billions and put little back in terms of contribution to the National tax system.

Apple are rapidly falling out of favour as can be seen by their products competing at much lower price points. The fruit no longer commands the biggest price premium because it no longer is the most innovative product available and there is little evidence that Apple have any ideas for future products that will generate big premium price tags from aspirational customers.

There are clearly issues with both the US tax system, and the loopholes globally that enable companies to do these sorts of things.

But I'm not sure about saying that Apple "put little back in".

As I posted above, they now claim to have created 600,000 jobs in the US and put back in $6bn in tax last year, which was 1/40th of all US corporation tax collected.

Stiggles · 22-05-2013, 12:56

Whatever is legal and illegal, apple know they are screwing the US out of money that should be paid. So why should they be apologised to? I think some senator has their head placed far to far up apple's arse here....

It's odd since when over here Google, Amazon etc got rapped for not paying taxes properly there were calls to boycott them and people whinging about the non payment. Yet apple need to have an apology

Stiggles · 22-05-2013, 12:57

Quote:

Originally Posted by calico_pie

There are clearly issues with both the US tax system, and the loopholes globally that enable companies to do these sorts of things.

But I'm not sure about saying that Apple "put little back in".

As I posted above, they now claim to have created 600,000 jobs in the US and put back in $6bn in tax last year, which was 1/40th of all US corporation tax collected.

They put little back in compared to what they should be paying in.

They are a US company. All monies should be taxed correctly no matter where its held. That goes for the rest of the companies who dodge it as well.

calico_pie · 22-05-2013, 13:06

Quote:

Originally Posted by paulbrock

is job creation a suitable substitute for corporation tax? (I believe Google used the same argument in the UK hearing)

Its been quite interesting reading a bit more about the case against Apple.

The US senate's case against Apple is quite different to any case against Starbucks, Google or Amazon here in the UK.

IRS: "I see you have $100bn in a bank account in Ireland".
Apple: "We do indeed".
IRS: "If you move that money to the USA you'll have to pay 35% taxes".
Apple: "We know".
IRS: "So why aren't you moving the money to the USA?"
Apple: "As you said, 35% taxes".

Basically, their issue is that Apple have avoided US corporation tax by not repatriating revenue / profit generated outside to the US back to the US.

That isn't so much a loophole, as just not doing something that no US company operating globally would do anyway, because the US is the only western country that taxes that money. (Pretty much every other country sees corporation tax as territorial, i.e. is paid in the country the money is generated.)

Countries like the UK have a case against Apple on the grounds that Apple are avoiding UK corporation tax by virtue of being based in Ireland.

But the US doesn't seem to have the same case at all, because the Senate's current argument against Apple seems to be that they should either:

1. Pay corporation tax twice - once in the country of origin, and again in the US.

2. Only pay corporation tax in the US.

So the number of jobs created in the US isn't a substitute for the corporation tax, because they are not really liable for that corporation tax unless they repatriate it. And they are under no legal obligation to do so.

All that the Senate are really arguing is that Apple are not paying enough non US corporation tax. But if they were, the beneficiary would be countries like the UK, not the US.

The long and the short of it is that the guilty party in all of this isn't Apple, its the US tax code which places such a heavy penalty on US companies repatriating money earned abroad to invest in the US.

calico_pie · 22-05-2013, 13:14

Quote:

Originally Posted by Stiggles

They put little back in compared to what they should be paying in.

They are a US company. All monies should be taxed correctly no matter where its held. That goes for the rest of the companies who dodge it as well.

See post above. They point is that they have paid all the US tax they are due.

Suppose you were a UK company who sold stuff in the both the UK and the US. Under UK tax law, you would be liable for US corporation tax on profits earned in the US, and UK corporation tax on profits earned in the UK.

You would be free to repatriate profits made in the US (minus US corporation tax) back to the UK without that money then being subject to UK corporation tax, because UK tax law accepts that the revenue was generated in the US, and tax paid in the US.

However, if you were a US company who sold stuff in both the UK and US, under US tax law, you would be liable for US corporation tax on profits earned in the US, and UK corporation tax on profits earned in the UK.

But here's the rub. If you were to then repatriate the UK profit (minus the UK corporation tax) you would then be subject to US corporation tax on that money. Meaning you would be taxed twice - UK corporation tax initially, and US corporation tax if you returned that money to the US.

My understanding is that the US is unique in this (at least in the western world), and that is the real issue that needs to be reformed in the US tax system.

All the stuff about Ireland is a red herring as far as the US is concerned. If those loopholes were closed, the beneficiaries would be countries like the UK, not the US.

calico_pie · 22-05-2013, 13:22

Quote:

Originally Posted by Stiggles

Whatever is legal and illegal, apple know they are screwing the US out of money that should be paid. So why should they be apologised to? I think some senator has their head placed far to far up apple's arse here....

It's odd since when over here Google, Amazon etc got rapped for not paying taxes properly there were calls to boycott them and people whinging about the non payment. Yet apple need to have an apology

That's because its not the same thing.

Google, Amazon and Starbucks were avoiding UK corporation they should have been due. And Apple are undoubtedly guilty of the same thing.

But the US Senate are arguing that Apple should return all money generated outside the US back to the US so that they can be taxed on it in the US. Something they under no legal obligation to do.

Here's a question for you:

Do you think profit generated by Apple in the UK should be subject to taxation in:

A. The UK?
B. The US?
C. The UK and the US?

calico_pie · 22-05-2013, 13:39

Quote:

Originally Posted by calico_pie

Countries like the UK have a case against Apple on the grounds that Apple are avoiding UK corporation tax by virtue of being based in Ireland.

Just to clarify this part. My understanding here is that Apple are avoiding UK corporation tax by doing the following:

1. Buying / importing finished products from China into Ireland.

2. Selling products in the UK.

3. Only paying corporation tax on the value added to the product between it arriving in Ireland, and being sold in the UK.

Because that 'added value' is less than the total profit made between it leaving China and being sold in the UK, Apple pay less UK corporation tax.

That, in my mind, is a far more questionable tactic of avoiding UK corporation tax, than what the US Senate are arguing Apple are doing to avoid US corporation tax.

And even then, from a logistics point of view is makes sense to import everything from China into one European destination.

The problem is Ireland basically undercutting everyone else with their attractive tax rates.

alanwarwic · 22-05-2013, 13:49

Quote:

Originally Posted by calico_pie

The problem is Ireland basically undercutting everyone else with their attractive tax rates.

Part red herring. Apple are supposedly only declaring a very small revenue to Ireland.

Most of the cash is in 'no fixed abode'. Whether this is in acquiescence with Ireland is open to argument.
I heard one quote that 'below 2% corporation tax' actually means as little as 0.1% tax.

21-05-2013, 12:39	#1
mondeo123 Forum Member Join Date: Jun 2010 Location: wigan Posts: 172	Apple 'among largest tax avoiders in US' http://www.bbc.co.uk/news/business-22600984 http://news.sky.com/story/1093691/ap...ance-questions

21-05-2013, 12:55	#2
finbaar Forum Member Join Date: Nov 2009 Posts: 3,921	Governments need to act as one to avoid these sort of practices. Companies are almost obliged to pay the lowest tax possible to maximise profits as part of the capitalist system.

21-05-2013, 13:14	#3
enapace Forum Member Join Date: Mar 2013 Posts: 4,249	This has been obvious for years only reason it come up now is because they did that deal to gather funds instead of bringing in those funds from there off shore back accounts.

21-05-2013, 13:55	#4
McTeagle Forum Member Join Date: May 2013 Location: London Posts: 177	Apple has made those profits offshore, and US tax is not due unless they bring those profits back into the US - which they are absolutely under no legal obligation to do. Quote: In its report into Apple, committee chairman Carl Levin said: "Apple wasn't satisfied with shifting its profits to a low-tax offshore tax haven." No, it wasn't - because Apple has not done this. "Shifting profits" means moving profits out of the US. They just happen to be making a lot of profits outside the US as well as within it. Quote: Companies are almost obliged to pay the lowest tax possible to maximise profits as part of the capitalist system. So people who have shares shouldn't expect a maximum possible return on their money? So much for pension funds then... Who on earth voluntarily pays tax that isn't due? Or maybe I'm wrong and people are gladly handing over their own money to the Treasury due to a shared sense of responsibility. Or maybe not... https://www.whatdotheyknow.com/reque...4%20070404.pdf

21-05-2013, 14:54	#5
Rodney McKay Forum Member Join Date: Feb 2009 Posts: 7,793	The problem is Ireland that offers much lower rates of corporation tax than other EU states, a bit rich when it has had to be bailed out by the likes of the UK.

21-05-2013, 15:11	#6
calico_pie Forum Member Join Date: Oct 2012 Posts: 9,428	The problem is the game, not the players. The only reason Apple is one of the largest, is because it is raking in the most revenue. So its also about the biggest tax payers in the US. 1/40th of all corporation tax collected in the US last year was paid by Apple, and they now employ around 600,000 people in the US. There clearly is a problem due to historical loopholes, but the solution isn't to use ordinary tax payer's money to go after a few big companies, who have not broken any law, but rather is for governments to co-operate and close the sort of loopholes that make it all possible.

21-05-2013, 17:57	#7
MikeB Forum Member Join Date: Jul 2000 Posts: 4,807	Quote: Originally Posted by Rodney McKay The problem is Ireland that offers much lower rates of corporation tax than other EU states, a bit rich when it has had to be bailed out by the likes of the UK. The UK selectively chose to bail out Ireland (we haven't bailed out everyone, as we are not part of the Euro). I believe we did this because the Irish economy will be very strong. It should be, so many companies are based there and it does have an awful lot of talent in the technology sector. We will get our money back plus a decent bit of interest. If it wasn't for all those many houses that were built unnecessarily and of course the global economic slump, Ireland would be a great economy right now. It'll always be a far smaller economy than the UK though, partly due to a much smaller population.

21-05-2013, 18:09	#8
Everything Goes Forum Member Join Date: Mar 2002 Location: In the future.... Posts: 11,259	Tim Cook does a nice sales pitch for Apples "Innovative" products at the end and has a fly swipe at their competitors hes probably thinking of Samsung! http://www.bbc.co.uk/news/business-22615146

21-05-2013, 19:06	#9
wavejockglw Inactive Member Join Date: Oct 2002 Location: Glasgow Posts: 10,276	Apple look to be in for a hammering both for their tax avoidance and their hardware specifications. They have been the kingpin for a long while and have become complacent and are about to get a hard kicking from the competition because they have been greedy and used litigation to stifle innovation and governments don't like arrogant companies that make billions and put little back in terms of contribution to the National tax system. Apple are rapidly falling out of favour as can be seen by their products competing at much lower price points. The fruit no longer commands the biggest price premium because it no longer is the most innovative product available and there is little evidence that Apple have any ideas for future products that will generate big premium price tags from aspirational customers.

21-05-2013, 20:20	#10
The Lord Lucan Forum Member Join Date: Apr 2005 Location: Scotland Posts: 4,966	Most of the money is made and spent abroad so the question is ... why does the US goverment think it is entitled to it. I think having so many retail stores with tax paying employees, data centres, manufacturing of two updated models (do Samsung etc do builds in the US at all??) and that a lot of the components that are made in the US + that they still are paying tax is quite enough..

21-05-2013, 20:24	#11
paulbrock Forum Member Join Date: Apr 2002 Location: Wapping, London Posts: 16,222	what I don't understand is what the committee call the "holy grail of tax avoidance" - the claim that Apple's tax paying subsidiaries are set up in a way, not that they pay e.g. Irish tax, but that they were tax resident nowhere.

21-05-2013, 22:39	#12
Stuart_h Forum Member Join Date: Jul 2005 Posts: 3,474	Much as i dislike Apple they are doing the same as most other multinational companies. These companies spend fortunes on accountants to minimise their tax liabilities. Its a good job too as Apple is then able to pass on all those savings to consumers ..... oh .... hang on a mo ..... (obviously i couldn't resist the last bit but the first bit is legit )

22-05-2013, 00:03	#13
The Lord Lucan Forum Member Join Date: Apr 2005 Location: Scotland Posts: 4,966	Senator Rand Paul's opening statement.. Wow! "Tell me a politician who is up here and doesn't try to minimize his taxes… Tell me what Apple has done is illegal. I am offended by a government… that convenes a hearing to bully one of America's greatest success stories… If anyone should be on trial here, it should be Congress. I frankly think the committee should apologize to Apple." Instead of Apple executives, we should have brought in a giant mirror. This problem is solely and completely caused by our tax code. This committee should look in the mirror. "I find it abominable." We need to apologize to Apple, compliment them for the job creation they're doing, and get on with our job and redo the tax code." I agree especially seeing they have created or currently support around 600,000 jobs in the United States, I think it's daft to investigate them.

22-05-2013, 00:07	#14
paulbrock Forum Member Join Date: Apr 2002 Location: Wapping, London Posts: 16,222	is job creation a suitable substitute for corporation tax? (I believe Google used the same argument in the UK hearing)

22-05-2013, 02:03	#15
PPhilster Inactive Member Join Date: Apr 2013 Posts: 1,693	Quote: Originally Posted by The Lord Lucan Senator Rand Paul's opening statement.. Wow! "Tell me a politician who is up here and doesn't try to minimize his taxes… Tell me what Apple has done is illegal. I am offended by a government… that convenes a hearing to bully one of America's greatest success stories… If anyone should be on trial here, it should be Congress. I frankly think the committee should apologize to Apple." Instead of Apple executives, we should have brought in a giant mirror. This problem is solely and completely caused by our tax code. This committee should look in the mirror. "I find it abominable." We need to apologize to Apple, compliment them for the job creation they're doing, and get on with our job and redo the tax code." I agree especially seeing they have created or currently support around 600,000 jobs in the United States, I think it's daft to investigate them. Exactly. If I were Tim Cook I never would have even shown up. At most, I would have said lower you corporate taxes to a competitive level and maybe I'll think about paying them.

22-05-2013, 07:15	#16
rosetech Forum Member Join Date: Oct 2008 Posts: 1,058	Quote: Originally Posted by The Lord Lucan Most of the money is made and spent abroad so the question is ... why does the US goverment think it is entitled to it. The yanks have a dual taxation policy, essentially we get a cut if you are an american company. I have no love for Apple - but they are not a charity, why would they not minimise your tax burden? The employ loads of people, they pay loads of tax, they contribute significantly to the economy. If it is as wrong as the MP's and Senators are making out, do your job and change the law I suspect as always it merely a diversion tactic - UK pay rise for MPs anyone.

22-05-2013, 07:28	#17
rosetech Forum Member Join Date: Oct 2008 Posts: 1,058	Quote: Originally Posted by paulbrock is job creation a suitable substitute for corporation tax? (I believe Google used the same argument in the UK hearing) Google UK have restricted any sales occurring in the UK which substantially reduces their tax burden. Guess what all companies do that. Do UK pay sales tax in other countries - nope they seek out the most efficient planning for their business - as a shareholder you would be outraged if the manager of your business provide the maximum it could to the government. You plan you tax to suit your business, if you are a multinational why would you put your cash where it will be reduced. Does anyone here contribute to a pension or charities - it reduces your tax burden, is that wrong too?

22-05-2013, 11:04	#18
calico_pie Forum Member Join Date: Oct 2012 Posts: 9,428	Quote: Originally Posted by wavejockglw Apple look to be in for a hammering both for their tax avoidance and their hardware specifications. They have been the kingpin for a long while and have become complacent and are about to get a hard kicking from the competition because they have been greedy and used litigation to stifle innovation and governments don't like arrogant companies that make billions and put little back in terms of contribution to the National tax system. Apple are rapidly falling out of favour as can be seen by their products competing at much lower price points. The fruit no longer commands the biggest price premium because it no longer is the most innovative product available and there is little evidence that Apple have any ideas for future products that will generate big premium price tags from aspirational customers. There are clearly issues with both the US tax system, and the loopholes globally that enable companies to do these sorts of things. But I'm not sure about saying that Apple "put little back in". As I posted above, they now claim to have created 600,000 jobs in the US and put back in $6bn in tax last year, which was 1/40th of all US corporation tax collected.

22-05-2013, 12:56	#19
Stiggles Forum Member Join Date: Jan 2011 Location: Dundee, Scotland Posts: 9,293	Whatever is legal and illegal, apple know they are screwing the US out of money that should be paid. So why should they be apologised to? I think some senator has their head placed far to far up apple's arse here.... It's odd since when over here Google, Amazon etc got rapped for not paying taxes properly there were calls to boycott them and people whinging about the non payment. Yet apple need to have an apology

22-05-2013, 12:57	#20
Stiggles Forum Member Join Date: Jan 2011 Location: Dundee, Scotland Posts: 9,293	Quote: Originally Posted by calico_pie There are clearly issues with both the US tax system, and the loopholes globally that enable companies to do these sorts of things. But I'm not sure about saying that Apple "put little back in". As I posted above, they now claim to have created 600,000 jobs in the US and put back in $6bn in tax last year, which was 1/40th of all US corporation tax collected. They put little back in compared to what they should be paying in. They are a US company. All monies should be taxed correctly no matter where its held. That goes for the rest of the companies who dodge it as well.

22-05-2013, 13:06	#21
calico_pie Forum Member Join Date: Oct 2012 Posts: 9,428	Quote: Originally Posted by paulbrock is job creation a suitable substitute for corporation tax? (I believe Google used the same argument in the UK hearing) Its been quite interesting reading a bit more about the case against Apple. The US senate's case against Apple is quite different to any case against Starbucks, Google or Amazon here in the UK. IRS: "I see you have $100bn in a bank account in Ireland". Apple: "We do indeed". IRS: "If you move that money to the USA you'll have to pay 35% taxes". Apple: "We know". IRS: "So why aren't you moving the money to the USA?" Apple: "As you said, 35% taxes". Basically, their issue is that Apple have avoided US corporation tax by not repatriating revenue / profit generated outside to the US back to the US. That isn't so much a loophole, as just not doing something that no US company operating globally would do anyway, because the US is the only western country that taxes that money. (Pretty much every other country sees corporation tax as territorial, i.e. is paid in the country the money is generated.) Countries like the UK have a case against Apple on the grounds that Apple are avoiding UK corporation tax by virtue of being based in Ireland. But the US doesn't seem to have the same case at all, because the Senate's current argument against Apple seems to be that they should either: 1. Pay corporation tax twice - once in the country of origin, and again in the US. 2. Only pay corporation tax in the US. So the number of jobs created in the US isn't a substitute for the corporation tax, because they are not really liable for that corporation tax unless they repatriate it. And they are under no legal obligation to do so. All that the Senate are really arguing is that Apple are not paying enough non US corporation tax. But if they were, the beneficiary would be countries like the UK, not the US. The long and the short of it is that the guilty party in all of this isn't Apple, its the US tax code which places such a heavy penalty on US companies repatriating money earned abroad to invest in the US.

DS Forums

Apple 'among largest tax avoiders in US'

22-05-2013, 13:14	#22
calico_pie Forum Member Join Date: Oct 2012 Posts: 9,428	Quote: Originally Posted by Stiggles They put little back in compared to what they should be paying in. They are a US company. All monies should be taxed correctly no matter where its held. That goes for the rest of the companies who dodge it as well. See post above. They point is that they have paid all the US tax they are due. Suppose you were a UK company who sold stuff in the both the UK and the US. Under UK tax law, you would be liable for US corporation tax on profits earned in the US, and UK corporation tax on profits earned in the UK. You would be free to repatriate profits made in the US (minus US corporation tax) back to the UK without that money then being subject to UK corporation tax, because UK tax law accepts that the revenue was generated in the US, and tax paid in the US. However, if you were a US company who sold stuff in both the UK and US, under US tax law, you would be liable for US corporation tax on profits earned in the US, and UK corporation tax on profits earned in the UK. But here's the rub. If you were to then repatriate the UK profit (minus the UK corporation tax) you would then be subject to US corporation tax on that money. Meaning you would be taxed twice - UK corporation tax initially, and US corporation tax if you returned that money to the US. My understanding is that the US is unique in this (at least in the western world), and that is the real issue that needs to be reformed in the US tax system. All the stuff about Ireland is a red herring as far as the US is concerned. If those loopholes were closed, the beneficiaries would be countries like the UK, not the US.

22-05-2013, 13:22	#23
calico_pie Forum Member Join Date: Oct 2012 Posts: 9,428	Quote: Originally Posted by Stiggles Whatever is legal and illegal, apple know they are screwing the US out of money that should be paid. So why should they be apologised to? I think some senator has their head placed far to far up apple's arse here.... It's odd since when over here Google, Amazon etc got rapped for not paying taxes properly there were calls to boycott them and people whinging about the non payment. Yet apple need to have an apology That's because its not the same thing. Google, Amazon and Starbucks were avoiding UK corporation they should have been due. And Apple are undoubtedly guilty of the same thing. But the US Senate are arguing that Apple should return all money generated outside the US back to the US so that they can be taxed on it in the US. Something they under no legal obligation to do. Here's a question for you: Do you think profit generated by Apple in the UK should be subject to taxation in: A. The UK? B. The US? C. The UK and the US?

22-05-2013, 13:39	#24
calico_pie Forum Member Join Date: Oct 2012 Posts: 9,428	Quote: Originally Posted by calico_pie Countries like the UK have a case against Apple on the grounds that Apple are avoiding UK corporation tax by virtue of being based in Ireland. Just to clarify this part. My understanding here is that Apple are avoiding UK corporation tax by doing the following: 1. Buying / importing finished products from China into Ireland. 2. Selling products in the UK. 3. Only paying corporation tax on the value added to the product between it arriving in Ireland, and being sold in the UK. Because that 'added value' is less than the total profit made between it leaving China and being sold in the UK, Apple pay less UK corporation tax. That, in my mind, is a far more questionable tactic of avoiding UK corporation tax, than what the US Senate are arguing Apple are doing to avoid US corporation tax. And even then, from a logistics point of view is makes sense to import everything from China into one European destination. The problem is Ireland basically undercutting everyone else with their attractive tax rates.

22-05-2013, 13:49	#25
alanwarwic Forum Member Join Date: Oct 2003 Location: the wild world web Posts: 28,132	Quote: Originally Posted by calico_pie The problem is Ireland basically undercutting everyone else with their attractive tax rates. Part red herring. Apple are supposedly only declaring a very small revenue to Ireland. Most of the cash is in 'no fixed abode'. Whether this is in acquiescence with Ireland is open to argument. I heard one quote that 'below 2% corporation tax' actually means as little as 0.1% tax.