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Irish Government May Close Apple's Biggest Tax Loophole

Posted by Soulskill on from the all-about-the-benjamins dept.

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."

25 of 292 comments (clear)

  1. Because Apple by kommakazi · · Score: 5, Funny

    I'm sure no other companies use this.

    1. Re:Because Apple by Anonymous Coward · · Score: 5, Funny

      Well, currently, no other "most valuable company in the world" does. You know, because like Highlander, there can be only one.

    2. Re:Because Apple by Xicor · · Score: 4, Informative

      actually most fortune 500 companies do something like this. they find loopholes in the american taxes by funneling money through other countries, but the other countries have loopholes going the opposite direction so they dont have to pay taxes there either. facebook last year only had to pay 5% in taxes or something.

    3. Re:Because Apple by Anonymous Coward · · Score: 5, Informative

      Saudi Aramco, the actual current most valuable company, doesn't pay shit because they basically own the Saudi government, which is a pretty sweet gig if you can get it.

      (But no, let's keep pretending that a cellphone manufacturer is the most valuable company in the world because they have the highest market capitalization when you sort everybody on Google Finance.)

    4. Re:Because Apple by djnanite · · Score: 5, Informative

      Actually, it's the awful commenters that are turning people away. For example, you only had to do a search in the Slashdot Search bar for 'Google Tax' to see half a dozen published stories about Google's tax exploits.

    5. Re:Because Apple by Charliemopps · · Score: 4, Interesting

      Apple was a pioneer of an accounting technique known as the “Double Irish With a Dutch Sandwich,” which reduces taxes by routing profits through Irish subsidiaries and the Netherlands and then to the Caribbean. Today, that tactic is used by hundreds of other corporations — some of which directly imitated Apple’s methods, say accountants at those companies.

      http://www.nytimes.com/2012/04/29/business/apples-tax-strategy-aims-at-low-tax-states-and-nations.html?_r=0

      Apple literally invented the technique.
      Others followed to compete.

      Personally, I support any and all means of tax avoidance, so I don't count it against them. But I love bursting Apple Fanboys bubbles.

    6. Re:Because Apple by crunchygranola · · Score: 3, Interesting

      That sounds unreasonable. I could understand if you had to pay the US government $1500 or something (5% of 30000). But why would you have to pay taxes over something someone else has already taxed you on?

      Ah, the theory of Immaculate Taxation! That corporate and investment income originates in the sanctified state of "already having been taxed" which frees it from ever having to pay a penny of taxes ever again. Indeed a mere penny of taxation levied on a million dollar revenue stream somewhere along the line makes it immune from ever having to bear taxes again (or at least if holy taxation writ were faithfully observed).

      --
      Second class citizen of the New Gilded Age
    7. Re:Because Apple by Plumpaquatsch · · Score: 3, Informative

      Actually, it's the awful commenters that are turning people away. For example, you only had to do a search in the Slashdot Search bar for 'Google Tax' to see half a dozen published stories about Google's tax exploits.

      Ohh? Let's compare the first 5 hits.

      First Google:
      http://hardware.slashdot.org/story/13/06/22/1716232/server-farms-flourish-in-iowa-microsoft-plows-700m-more-into-des-moines - "Google said it would put another $400 million into its facility in Council Bluffs. Why Iowa? Aggressive tax incentives" - mentioned after Microsoft and Facebook
      http://tech.slashdot.org/story/13/05/31/1721232/google-maps-used-to-find-tax-cheats - In Lithuania - Not about Google at all.
      http://news.slashdot.org/story/13/05/22/1549218/eric-schmidt-google-will-continue-investing-in-uk-even-if-taxes-raised - sort of
      http://yro.slashdot.org/story/13/05/20/2213205/nsa-data-center-the-focus-of-tax-controversy - imagine, the NSA has to pay taxes for their data centers, like Google - so not about Google at all
      http://yro.slashdot.org/story/13/05/19/1322225/amazon-google-and-apple-wont-need-to-pay-tax-despite-goverment-threats - all of the big ones

      Now Apple:
      First this article
      http://apple.slashdot.org/story/13/07/02/2150217/apple-powering-nevada-datacenter-with-solar-farm - also pays tax for it
      http://apple.slashdot.org/story/13/05/21/0222210/web-of-tax-shelters-saved-apple-billions-inquiry-finds - Sure, Google does the same, but we grill Apple because Google lobbies more.
      http://apple.slashdot.org/story/13/01/23/1421200/tech-firms-keep-piles-of-foreign-cash-in-us - Well, that's odd, there is no mention of Apple in the summary nor in TFA, but Google is in there - yet it is found when searching for Apple
      http://apple.slashdot.org/story/12/11/04/2226236/apple-pays-only-2-corporate-tax-outside-us - summary quotes almost the full article but the part about other companies, like Google

      So lets see: Out of 5, 2 say Google is paying taxes, 1 Google helps find tax cheats, 1 Google is paying little taxes but it's okay, and 1 Google is paying little taxes but would pay more if they were asked.
      Out of 5, 1 says Apple pays taxes, 1 about the Irish wanting Apple to pay more taxes (but nobody else it seems), 1 about the US wanting Apple to pay more taxes (but nobody else it seems), 1 about the Brits wanting Apple to pay more taxes (but nobody else it seems), and 1 about how its obviously Apple's fault that everybody else but Apple pays so little taxes.

      --
      Of course news about a fake are Fake News.
  2. Tax Avoidance by Anonymous Coward · · Score: 5, Insightful

    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

    1. Re:Tax Avoidance by PPH · · Score: 3, Insightful

      I own Apple shares. So in a small way, I already benefit from this practice.

      --
      Have gnu, will travel.
    2. Re:Tax Avoidance by MickyTheIdiot · · Score: 3, Interesting

      My family owns Apple shares and I think it's wrong.

    3. Re:Tax Avoidance by dgatwood · · Score: 4, Insightful

      Many jobs are nonessential up until they aren't. For example, you don't need the people who inspect aircraft repairs or nuclear power plant repairs to be there every minute of every day, but if they don't do their jobs for a long enough period of time, you get consequences.

      --

      Check out my sci-fi/humor trilogy at PatriotsBooks.

    4. Re:Tax Avoidance by ewibble · · Score: 3, Insightful

      I do, I sometimes don't claim back charitable donations. I don't claim depreciation on my rental property I do not think it is valid expense. I claim deductions that I believe to be fair and for business purposes, I do not claim ones i don't, legal or not.

      But the real reason is probably everybody could get away with paying less tax if they knew what they where doing. The reason normal people don't is it is not feasible for the average person to pay millions to an accountancy firm to set up tax shelters. Once a company starts making billions however those admin costs become insignificant.

      Why couldn't you set up a company in Ireland and contract out of that instead of being directly employed by your company. (they would think you where dodgy but only because it isn't common practice). Your employer is paying you the same amount, what difference does it make to them. The hassle is just not worth it, at least for the common man.

    5. Re:Tax Avoidance by Stickerboy · · Score: 3, Interesting

      My family owns Apple shares and I think it's wrong.

      Just curious. Do YOU pay more taxes than you're legally obligated to?

      If not, why not?

      You've just stated that you "think it's wrong" that Apple pays no more taxes than they're legally liable for. Which would make YOU wrong for not paying extra taxes.

      Whoa. You're confusing "It's wrong because ethically it stinks" with "It's wrong because it's against the law".

      It IS wrong that multibillion dollar corporations are unfairly paying cellar-level taxation for large profits made from consumers. Just because corporations own governments around the world and have enshrined that unfairness in taxation law to benefit themselves does not suddenly make that right.

      --
      Light a fire for a man and he'll be warm for a day. Light a man on fire and he'll be warm for the rest of his life.
  3. job killing regulations by Joe_Dragon · · Score: 3, Interesting

    apple will just move to the next free zone

  4. Linkbait by Lysol · · Score: 3, Informative

    Apple is not the only company doing this. Google does it was well.

    1. Re:Linkbait by MickyTheIdiot · · Score: 4, Insightful

      This is bullshit. The link between huge corporations and jobs has been use to justify all types of abuses and it's time to move on. The Internet has killed that link. We are shoveling more an order of magnitude more money (at least) towards corporate welfare than we do towards "real" welfare based on that theory. The small business is the only that is going to save he economy of the U.S. because those are the only jobs that are based in communities. The race to the bottom has made many multi-national employees no better off than slave labor. It's time to STOP shoveling money towards he biggest multinationals and taking care of the people that are doing the REAL capitalism, and that's small business owners.

  5. Tax everywhere by prestonmichaelh · · Score: 4, Insightful

    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).

    1. Re:Tax everywhere by cheesybagel · · Score: 4, Informative

      Different countries have different ways of appropriating revenue. Take Russia with their relatively low flat tax. It was made possible in a large part because of the State is being funded by oil tax revenues. In the case of Bermuda they have these low taxes for corporation and individual income but the kick is that land taxes are extremely high and they live on tourism revenues so you get taxed for snorkling, renting a hotel, etc. Monaco has the casino profits. Etc.

    2. Re:Tax everywhere by ShanghaiBill · · Score: 3, Interesting

      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.

      Because that would quickly turn into a race to the bottom. If Ireland charged 5%, then Bermuda would charge 4%, so Ireland would lower theirs to 3% .... The only Nash Equilibrium is zero.

      What does Bermuda get out of having Apple "based" in Bermuda if they don't get any tax revenue?

      They get corporate registration fees, and jobs for a few lawyers and administrators. That is better than nothing.

  6. Good by msobkow · · Score: 4, Insightful

    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.
  7. Oh wait... by kommakazi · · Score: 4, Informative

    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

  8. Not a Loophole! by mythosaz · · Score: 4, Insightful

    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.

  9. Not a US company - Can't lobby by Leuf · · Score: 5, Insightful

    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.

  10. Pay American taxes, or lose American support by swb · · Score: 3, Interesting

    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.