And we thought Apple had lost its touch

Turns out, it’s still highly innovative, just in other areas:

But Irish tax law only considers companies residents of the small European country if they are managed and controlled there. The U.S. Internal Revenue Service, meantime, only counts corporations as American if they are incorporated here.

The result: Apple pays little or no taxes to either country on much of its international revenue, according to the report.

–“Apple Avoids Overseas Taxes, Panel Finds,” WSJ (paywall)

As the article explains, Apple incorporates many of its international operations in Ireland, but “manages and controls” them from Cupertino. One subsidiary didn’t  file a tax return, anywhere, even though it took in nearly $30 BN between 2009 and 2012.

9 thoughts on “And we thought Apple had lost its touch

  1. just on business tv … apple has $100B offshore … somebody justified it because 61% of the revenue comes from outside US … but cleverly side-stepped how much of the $100B came from the US (of if any tax was paid to anybody on the $100B)

    further tax evasion by claiming to be Nevada corporation
    http://www.nytimes.com/2012/04/29/business/apples-tax-strategy-aims-at-low-tax-states-and-nations.html

    above lists reported profits of $34.2B and total corporate taxes of $3.3B or 9.8%

    the Ireland connection has also come up with Google evading UK taxes … which is being looked at in real time

    Special Report – How Google UK clouds its tax liabilities
    http://uk.reuters.com/article/2013/05/01/uk-tax-uk-google-specialreport-idUKBRE94005R20130501
    Google insider exposes “immoral” tax scam
    http://www.thesundaytimes.co.uk/sto/news/uk_news/National/article1261720.ece

    • lhw0,

      Apple duly noted that they have broken no laws, and I’m sure Google will follow suit.

      Wonder if they understand that’s not the problem?

      On the other hand, if they have a legal way of reducing their tax liability, and thereby improving their bottom line, and they don’t take it, would they be in jeopardy of lawsuits by shareholders? Anybody out there know anything about how this works?

  2. in the case of Google’s former employee, he claims to be releasing 100,000 emails showing contracts were for English customers, signed and executed in England … but recorded as having been done in Dublin. So far Google has been claiming that they broke no laws.

    • Reminds me of the difference between a criminal cartel and a multinational corporation. When the cartel tries to influence our government, we call it bribery and graft. When a corporation does it, it’s campaign contributions and lobbying.

  3. and … Apple Meets The “Fairness Doctrine”, Is Set To Pay A Whole Lot More In Taxes
    http://www.zerohedge.com/news/2013-05-20/apple-meets-fairness-doctrine-set-pay-whole-lot-more-tax

    For those confused, Congress has just announced it is shocked, SHOCKED to learn it has over the past several decades passed legislation making tax shelter loopholes – such as those used by AAPL, GOOG and every other multinational company – perfectly legal, and which will now be turned against those very companies in a kangaroo court of law, seeking nothing more or less than to extract all those pounds of flesh that the government so generously let slip between its fingers for so many years

    … snip …

    Actually the list of criminal acts by too-big-to-fail has gotten fairly long … including money laundering for terrorists and drug cartels, the conspiracy related to Libor rate fixing, aiding & abetting tax evasion, etc.

  4. One of the things going on around the hearings in real time … is the comments trying to imply that the special interests that lobbied heavily for the loopholes (and in many cases actually prepared the draft wording) are totally different from the special interests that took advantage of the loopholes (special interests that take advantage of the loopholes can’t be blamed for there being loopholes … even when they can be blamed for the loopholes)

  5. Ireland feels the heat from Apple tax row
    http://news.yahoo.com/ireland-feels-heat-apple-tax-row-122525452.html

    a few years ago CBS(?) was covering an annual economic conference. part of the broadcast was a a group of economists sitting around discussing the benefits of flat-tax. they had two major points … unrelated to any direct flat-tax benefits. one was that it would eliminate the selling of tax loop-holes, the major contributor to congress being considered the most corrupt institution on earth. another was tax loop-holes are the major contributor to tax code being enormously complex and 65,000 pages (at the time) … dealing with complexity costing significant part of GDP; flat-tax would cut the code back to 400-500 pages, the simplification would gain a direct 3% in GDP and another 3% gain in GDP with decisions being based on business rather than tax-code. semi-humorously, they mentioned that the major entity lobbying against the elimination of tax loop-holes was Ireland.

    • Thanks very much.

      The idea is extremely appealing, but the issue of eliminating loopholes (for you, legitimate society-improving deductions for me) is different than proposing a flat tax (e.g., 14% for everyone). The question is “14% of what”? Are we going to have a standard deduction and then pay X% above that? What about businesses? How would they define “income”?

      It is still possibile to eliminate loopholes/deductions and preserve a progressive tax structure (14% for incomes up to 100K, 20% for 100K-$250K, 30% for anything over 250K, for example).

      And, as you point out, we would probably need a constitutional amendment and the threat of incarceration to keep Congress from passing tax breaks either for their friends and contributors or for social engineering.

  6. The awareness about loopholes (even involving ones involving Ireland) has been around for years, if not decades … so what is it with the public hearings?

    One of the claims involves articles about paying for loopholes has the highest ROI of any business investment (some claims that it can be as much as million dollars for every dollar spent on congress). The scenario now is how can members of congress reform the loophole process so that instead of one time payment for loophole … they can get re-occurring payments every year. A temporary stopgap is to hold public hearings every year about eliminating loopholes to motivate a huge new influx of special interest (sort of analogous to blackmail)

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