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Irish Government May Close Apple's Biggest Tax Loophole
DavidGilbert99 writes "Ireland and its tax system came under some extreme scrutiny earlier this year when it was revealed that Apple funneled billions of dollars of revenue though three subsidiaries based in the country. Thanks to a loophole, none of these subsidiaries were tax-resident in Ireland, meaning they didn't even have to pay Ireland's relatively low 12.5% corporation tax rate. Worryingly for Apple, Ireland's finance minister may now shut this loophole. A measure within a new budget bill (PDF) would disallow Apple's status as a 'stateless' corporate entity for tax purposes. Apple will still be able to select a country like Bermuda as its tax residence, but it's a step in the right direction."
I'm sure no other companies use this.
I will not speak out about this practice that hurts me indirectly because I am deluded into thinking that any day now I'll be rich enough to make use of it myself.
- Joe Sixpack Americano
apple will just move to the next free zone
Wrong!
If you start charing us tax, you'll lose even the tax we're paying you now, because we'll move somewhere else. Err... right, we're not paying any. Oh, oh, I know! Job, if you charge us tax we'll have to fire the two people that earn minimum wage for us in your country! You anti-capitalistic pigs are destroying jobs!
Captcha: avarice - I can haz source code and database of this captcha? I really likez.
Apple is not the only company doing this. Google does it was well.
I don't understand why countries like Ireland or Bermuda or wherever don't all just charge a small tax of some kind (like say 5%) that keeps the companies coming there, but gets them tons of money. What does Bermuda get out of having Apple "based" in Bermuda if they don't get any tax revenue? They get no additional jobs or property taxes (except maybe a mailbox rental).
It's about time the multinational thieves got lynched and paid their fair share.
I do not fail; I succeed at finding out what does not work.
Finally, something is making sense in this world.
Worry implies a person who is worrying.
I hate it when people talk about worry like it's a nebulous, amorphous thing that just sort of sneaks up on this.
First post after my first post.
If we fixed our tax codes maybe companies and privileged individuals wouldn't constantly be jumping though the loopholes.
Google: http://www.irishtimes.com/business/economy/europe/concern-about-irish-tax-reflects-disquiet-about-google-1.1559370
M$: http://www.businessinsider.com/apple-microsoft-avoids-taxes-loopholes-irs-2013-1
The fact is corporations need to be taxed because otherwise you would just shift all your assets into a corporation with you as the sole proprietor and pay no tax at all. In fact this is more or less what those CEOs you hear "only take minimum wage" do. They get their income from either bonuses or stocks which are taxed differently. Were they taxed more heavily this would not happen. Meanwhile us chumps can't enter this little shell game. BTW this is one of the arguments for the so called flat tax systems.
A step in the right direction would be expanding tax shelters so that us little people can use them too, not just the big boys.
To draw a parallel, we should just let stateless people wander around and do whatever they please like Apple, rather than confine them to an airport.
Amen and amen. You, sir, have a bit of common sense in that head of yours.
In SOVIET RUSSIA... erm...NSA AMERICA, the Internet logs onto YOU!
A loophole is unintended.
If anyone thinks that the tax code and the ability to do exactly what Apple (and others) are doing isn't completely intention is an idiot.
I have no problem with corporations taking advantage of whatever the law allows them to do but there should be consequences. If the government is going to consider a corporation to be like a person with 1st amendment rights and money to be speech, well they are declaring their corporate personhood to not be a citizen, only a resident. Residents don't get to vote, only citizens. If you don't have a vote then you shouldn't have any right to contribute anything to the election process. If you want a voice in the government then pay taxes.
Or maybe, just maybe, we quit taxing the hell out of everything and let everyone keep their money.
Mike @ The Geek Pub. Let's Make Stuff!
The mere semantics of governments calling it a "corporate tax" is disingenuous. A corporation is not an inanimate object separate from humans. An income tax on corporations is really an income tax on people, which include its shareholders, employees, and many times its customers as reflected in the price of products. And since shareholders/employees already pay income tax on their earnings and customers sales tax on their purchases, a corporate tax is really just double taxation. If governments want to have an honest debate about corporate tax they should first be honest about what it really is and who actually pays it. When that happens I suspect there will be less lynching of corporations by the uninformed citizenry.
I own Apple shares. So in a small way, I already benefit from this practice.
Unless you own millions of dollars worth of shares, I assure you that the net benefit between your gains on that stock and what you personally have to chip into the US coffers because of companies like this is a negative for you.
If companies like this repatriated the profits that they are stashing overseas, much of our government budget problems would be solved. As it is, you and I are stuck with the bill - contrary to the propaganda on Fox News and Talk Radio.
Yes, the US tax system is THE worst in the World and needs to be reformed (like eliminating the loopholes that allow the very rich to pull shit like this) so that companies don't have to nor feel the need to do this shit. And we need to bring back Eisenhower (Republican) era Income Tax rates. Remember, those were the best times for the US economy so saying that taxes kill prosperity is not true - if anything, it increases it because it stops this obscene disparity of wealth.
Folks, we are currently headed to a Third World economy: very rich and us peons who have no hope to get anywhere. That wasn't true back when the top income tax bracket was over 90%.
Why does Apple get to lobby the government or expect the support of the government when they won't pay for it?
Maybe the next time Apple has a patent dispute, the Chinese authorities embargo their product at the docks, or the EU starts making demands the US government should tell them to sit down and take a number.
I love how corporations and the rich hate the government and won't pay for it until they need it to do their bidding.
Geez, BasilBrush, why don't you just post under your real account?
DUMP THE STOCK!
The people that you're referring to are being paid with stock in the company. If they hold it for more than a specific amount of time before they sell it, it is taxed as capital gains instead of income. Warren Buffet who often proclaims that his secretary pays a higher income tax rate than he does, could easily change that by cashing out his stock based compensation before the capital gains cutoff date. Of course, he doesn't because he doesn't want to pay more in tax.
Didn't we just read a story about that?
putting the 'B' in LGBTQ+
I'm Irish and have ranted for years about our idiotic corporation non-tax regime. This announcement doesn't close either of the loopholes used by a large number of corporations to choose how much corporation tax they pay here. As your quote directly attests, you will still be able to have an Irish company which is not tax resident in Ireland. It also doesn't change our transfer pricing rules so that the Irish company "paying taxes" in the Cayman's can still always happen to charge the Irish company whatever it wants to to make their Irish corporation tax liability whatever they want. In 2012 Google banked €15.5B in Ireland and decided to increase the amount they payed in corporation tax to €17M. It "boosted its gross profit by 22 per cent to more than €11 billion. Its administrative expenses also jumped by €2 billion, however, wiping out most of the gains in operating profit." Those "administrative expenses" are where they hide the "IP" payments to the subsidiaries who "pay tax" in the 0% tax haven.
All that might change in 2015 (they had to agree to give the accountants enough time to make sure they could re-arrange their tax evasion arrangements) is that Apple might no longer be able to use Ireland as part of its scheme to make itself not pay tax anywhere (i.e. instead it will have to pay 0% somewhere). I'm not really sure anyway what Apple's aim was with this twist anyway, as they could already legally pay nothing on the money it could legally route through it's irish (and dutch) network of companies to its 0% haven of choice, so who cares.
I'll just leave this here
http://www.youtube.com/watch?v=d4o13isDdfY
Few things sadder than someone who proudly declares that they have nothing important to say and yet who fails to even deliver that simple of a message on time.
If it's for-profit but free, you're not the customer -- you're the product (e.g., the Slashdot Beta's "audience").
Sometimes reading past the title of the post is helpful. The GP answered your question before you asked it.
And then once they move to the next lowest rung on the race to the bottom, what -- are they gonna set up robots there or something?
I tend to find that if the only thing someone can offer in defense of a policy is that it's "job creating," then they damn it with faint praise. Many extremely negative behaviors "create jobs." Pimps create jobs. Drug lords create jobs. People who dump toxic waste create all kinds of jobs in the cleanup. Heck, bureaucratic redtape creates jobs to deal with it all!
Saying something "creates jobs" is nothing more than a prettier version of the broken window fallacy.
If it's for-profit but free, you're not the customer -- you're the product (e.g., the Slashdot Beta's "audience").
Corporate tax in the global world is very complex.
On the one hand, you have global companies who create products/services in lots of countries.
So where do they 'book' their profits? The ability to choose a place to book profits is something that has to be done.
Now, this of course has resulted in companies doing little/no work in certain countries, yet picking it as the country to 'book' their profits due to the low rate.
This is not a complete game. For example, Apple pays US corporate taxes on the income it gains inside the US. The issue is generally, what does Apple do with the profits it earns outside the US.
Nonetheless, let's say Apple does almost all it's work in the US. Yet, it sells iphones in say India.
I can bet you there are a bunch of Indians who would then see Apple taking their country's money overseas, So they of course think, they should get a slice of Apple's corporate taxes as well
There's no real moral absolute to say that Apple should book it's foreign income earned in India to the US so the US government benefits.
Quite frankly it's a giant game. And almost every loophole probably has a legitimate use case somewhere.
Get over your progressive selves. Keep your thieving hands to your damn self.
This is NOT true.
You're on slashdot, you might know some tech, start a business, consult and incorporate.
Drug dealers shift their money around so the profit appears well away from where it originated. Ditto all major corporations.
Why? So governments around the world will have more taxes for bigger, better NSAs? At least Apple isn't usurping the rights of bystanders while no one is paying attention. I'd rather have Apple pay $0 in taxes than have the money go to any government in the world today.
Why is Apple "stateless"? What the hell does that mean? Are they above every country's law? I always assumed it's something bad, but apparently it's not if you're a corporation. This is just beyond me.
Clearly, the Irish have not figured out who's the boss.
You are welcome on my lawn.
Getting listed on NASDAQ however is not quite that simple.
The Irish make ~$46B in tax revenue from corporate taxes. Their GDP is only 210B. Apple's gross income is ~$60B. I doubt Apple is paying close to 80% of their income to the Irish.
Custom electronics and digital signage for your business: www.evcircuits.com
It's called profit shifting, and its basically just an accounting device.
It doesn't correlate with 'entity' activity with producing or selling product, it doesn't relate to the real world in any way (in which most of Apple's product is now produced in China and sold in multiple overseas destinations), it doesn't even remotely resemble what happens administratively (the Apple administration and design facilities being resident in California) and it doesn't even represent what happens to the money after it's been 'cleansed' by profit shifting (it's parked in an overseas bank somewhere and can't be domiciled to the US because that would attract the tax that has been avoided) ... what it does is essentially insulate the income from everything and everyone who might have a claim on it (including taxpayers, authorities, shareholders and public creditors of the 'entity')
The Irish government and people have been spongeing off the rest of the world as a tax haven, and facilitating this for years, but invariably adopt the 'who me?" defence when pressed on the matter. (As have Lichtenstein, Luxembourg, Monaco, Bermuda, the Antilles and a host of other tinpot jurisdictions that the world ... and yes, our own OECD sponsored tax authorities ... tolerates in the interests of keeping its rich and powerful happy and content.) Ireland compounds its sins with a low tax rate for 'legitimate' foreign investment, but try to sell that to the rest of the world as legitimate tax competition.
Bitching about it and not doing anything about it has been the response of governments since time immemorial .... because that's what they do. Developing a new set of rules, tying an entity's place of residence to its serious production, sales, design or other legitimate economic activity has been something put on the back-burner by the world and its revenue authorities for years (and, unsurprisingly, major multinational corporations take advantage of this). You want to seriously blame anybody ... blame our politicians, our bureaucrats, our legal professions, our accounting bodies and our financial institutions ... who all make serious bucks thanks to the status quo.
Dear Apple,
We would like to help, we sincerely would. I'm sure that it must be frustrating for a company as large as yours to face state sponsored intellectual property piracy on this scale.
However, our records indicate that you are a company registered in Bermuda. We have included the phone number and email address of Bermuda's State Department for your reference.
We wish you the best of luck!
Sincerely,
The US Department of Trade
Why is it when Apple does something bad, the Apple fans come out and say "but ... Google do it too" - like a whiny child. Now to shut the Apple fanboys up, the same thing happens when someone posts an article indicating Google did something bad. The Google fanboys also whine like a bitch.
Stop defending brand names - just stop it! Instead, recognise that Apple IS unethical. Recognise Google IS unethical. Microsoft IS unethical (note: alphabetically listed - so STFU fanboys).
If any one of these companies was ethical, they would blow the whistle and support closure of these loop holes, because that IS in society's interest.
This ISN'T an IOS v/s Android war... this IS a corporations vs society war.. IT IS ALSO a mega-rich v/s everyone else war. Don't be a pawn.
had is the result of crazy tax laws trickle down taxation. It is only fair when everyone is taxed how much is made not how or where.
If he does, it certainly wasn't reflected in that post of his.
I beg you to post more SEO-bait articles with the word "Apple" in the title for no apparent reason!
Maybe you could start covering the fruit and produce industry?
Pfft. If you are a multi-national company with shareholders, you minimize your tax burden, by optimizing your company structure within whatever legal framework exists. This isn't exclusive to apple, and is not going to suddenly stop when Ireland change their taxation law. The company (like all the major multi-nationals) will simply evolve to make the best use of whatever taxation structure is possible.
If apple (or google, or samsung no doubt) were to NOT make use of legal quirks like this, then they will be out-performed in the market by those who do. Their major shareholders would also be asking questions/questioning the competency of their accounting and legal departments for missing the opportunity.
Yes it is a step in the right direction, for Ireland's sake (it will no doubt help their economy), but to complain about apple, google, GM, GE, Microsoft or any other multi-national doing such things is going after the wrong people. Take the issue up with the people who write the laws. They're the ones at fault here, not those who are simply making use of the law to optimize their company structure.
I run: Windows, OS X, Linux, FreeBSD. Just because you have a hammer, doesn't mean everything is a nail.
Except of course every time you spend money, or it goes to your employees via payroll tax. Money sitting in an account is no use to a corporation until they do something with it. At which point it will end up being taxed.
I run: Windows, OS X, Linux, FreeBSD. Just because you have a hammer, doesn't mean everything is a nail.
You do not need to be listed on the NASDAQ to do exactly what is happening here.
I run: Windows, OS X, Linux, FreeBSD. Just because you have a hammer, doesn't mean everything is a nail.
This law may have made sense in years gone by where a business required an actual physical presence and employees to operate in a particular country. It would have encouraged actual business set up and the associated local employment, etc.
I run: Windows, OS X, Linux, FreeBSD. Just because you have a hammer, doesn't mean everything is a nail.
My problem with the summary, other news sources (including NYT) and many comments is that Apple themselves state:
"Apple does not move its intellectual property into offshore tax havens and use it to sell products back into the US in order to avoid US tax; it does not use revolving loans from foreign subsidiaries to fund its domestic operations; it does not hold money on a Caribbean island; and it does not have a bank account in the Cayman Islands."
(From testimony of Apple Inc. before the Permanent Subcommittee on Investigations US Senate)
http://www.apple.com/pr/pdf/Apple_Testimony_to_PSI.pdf
Ah but you do not need to spend the money where you made it. That is the beauty of it. Remember that yatch Steve Jobs ordered on demand? Others are buying property all over the world. This in turn is inflating property prices in capital cities even when we are in the middle of a housing crash.
The number of employees keeps decreasing when you offshore all your production abroad and outsource the helpdesk to some place in India.
Then there is the automation of business processes, we should know since we are the ones doing it, which is eliminating a lot of jobs. The prospect is that eventually those people will find less repetitive jobs but what is happening so far is certainly... not great.
Since this is a story regarding Ireland, there is a legal obligation that Bono and/or U2 have to be mentioned at least once, especially since they used to be business partners. Remember the U2 special edition iPod? U2, reared in Ireland, have (has?) been roundly criticized by the Irish press/public for moving a lot of their business holdings out of Ireland (I believe to the Netherlands) to reduce their tax burden. They are made out in the press to be ungrateful tax dodgers/cheats. They are, it seems, working the loopholes like everyone else that can hire top-notch corporate tax accountants. Ireland has its financial troubles like a lot of countries, but a lot of the "Celtic Tiger" growth during the pre-2008 bust as due to these special tax laws. What goes around, comes around.
So if Corporations are legal people then why don't we put one in jail for tax evasion. Like the bumper sticker says: I won't believe that corporations are people until Texas executes one !!!
Paul E. Bahre
"companies like..." before "Apple" and maybe a "...and others" after from time to time in the summary?
Like anyone can even know that
They among many tech companies do the double-dutch. Oh wait that fucking headline doesn't work as link bait. Who gives a shit about google.