Originally Posted by alanwarwic:
“What's it about then? Both Google and Apple are scammy as far as I am concerned.”
I don't think I can explain it any better than I already have:
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.
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.