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Italy Investigates Apple For Alleged Tax Fraud
Frankie70 writes in with some more bad news for Apple in Europe. "U.S. tech giant Apple is under investigation in Italy for allegedly hiding 1 billion euros ($1.34 billion) from the local tax authority, two judicial sources with direct knowledge of the matter told Reuters. Milan prosecutors say Apple failed to declare to Italian tax authorities 206 million euros in 2010 and 853 million euros in 2011, one of the sources said, confirming a report by Italian magazine L'Espresso. The Italian subsidiary of Apple booked some of its profit through Irish-based subsidiary Apple Sales International (ASI), thus lowering its taxable income in Italy, the source said."
Not the people to try tax evasion with...they are pros
Criminal means convicted under the law - so it's precisely lobbying and other corruption which stops this behaviour being criminal.
There is no solution except a tempering of capitalism. If you allow businesses to become too powerful, they will take over governments. They have taken over governments.
While despicable since megacorps like Apple have no defense for not paying what's owed as part of the cost of doing business, it remains to be said that the taxation system worldwide is completely out of control. No percentage will ever be enough for any government and thus tax paying entities must find techniques to minimize the fleecing.
They do business in Italy. They get money in Italy. They pay Apple (Eire) an extremely uncomptetitive rate for the "rights" to use their own frigging products in Italy so that they make no profit off massive revenue.
It's absolutely no different from Hollywood Accounting.
And it IS tax evasion.
If a private corporation cannot make 3% ROI, then it's a failure. Since so many multinationals manage to wrange a way to a NEGATIVE return on investment, then how the hell is this fatuous meme "The private industry can be profitable, the government can only run things into the ground" created?
Because they're avoiding taxes by tricks.
They have two options
1) they are incompetent, in which case they should be closed down by shareholders for incompetent management and all C*O pay should be slashed because so few manage to make any profit for the company.
2) they are illegally evading taxes but are otherwise actually competent at business
Paying for the stuff being done is a "magic number that equals Enough for the taxing authority".
Morover, when the subject is executive compensation, you're all about how it's allowed that they can just be given as much as they can get away with because "you can't put a limit on what someone earns".
Yet when it comes to government, somehow, there's a magic number that they cannot spend above and must be limited.
Hell of a double standard you've got there.
Technically it's tax avoidance, which is immoral but not illegal.
It's absolutely no different from Hollywood Accounting. . . Because they're avoiding taxes by tricks.
Um, that's a contradiction. Corporations like Apple pay less in taxes because they can find loopholes. That's very different than a corporation basically lying to their creditors about how much money they made. I suspect that the Italian government, because it is desperate for money, are now going after practices that they've allowed for years even though tax laws have not changed.
In crisis-hit Italy, tax authorities faced with dwindling revenues have become more aggressive with domestic and multinational companies.
They have two options
Or they can wait until the audit is over and Italy finds that they did nothing wrong.
Well, there's spam egg sausage and spam, that's not got much spam in it.
there's no issue about where the sales are made actually in this.
what they have done is artificially move the on-paper profits to the ireland based entity - which is owned by the same people. sales are done in italy, but they're claiming that they make no profit from the sales in italy because they (on paper only, mind you, it's not like they're actually ferrying the shit through ireland) buy the devices at retail price from the another entity in the business which is based in ireland.
why is it important to squash this practice eventually? well doh, there wouldn't be any taxes to be paid on any corporate profits stemming from sales anywhere else than ireland in europe if they don't do something about it(the alternative is in practicality to raise VAT so that all corporate profits taxing comes from VAT... which might not be that bad of an idea, alternatively force ireland to change it's laws to stop acting as a tax haven stopgap for this purpose)..
"ASI contracts with mainly Chinese companies to manufacture iPads and iPhones. ASI then sells these products to another Irish company which resells them to retail subsidiaries in Italy and other European countries.
The pricing of the inter-company transactions ensures that the lion's share of the profit ends up with ASI, the Senate report said. Low profits in countries like Italy mean low tax payments there."
world was created 5 seconds before this post as it is.
Well in this case, apparently not.
I think that's precisely why Apple is being investigated here, what's mere avoidance in other countries sounds like it may well be evasion in Italy.
They do business in Ireland and they sell to customers in Italy. The whole point of the EU is it's a single market, that means, you can establish your company once and sell to everyone within that market. If you set up in Ireland and sell to Italians, not only is that not tax evasion, that is the point of the EU in the first place!
These companies have all had exactly the same tax arrangements for years and as Apple point's out in the article, have been repeatedly audited and passed. In fact Italy appears to have audited Apple three years in a row, which seems only explainable as harassment - tax audits are supposed to be semi-random spot checks to ensure compliance. If you pass an audit, getting audited the next year is just a waste of time and money for all concerned.
What's happening now is that a lot of governments around the world, having spent many decades promoting trade and economic integration when times were good and they had excessively cheap credit, now decided that maybe free trade isn't such a hot idea after all. After all, it might mean that other countries who you trade with end up more appealing to do business in. Ireland has had a long-standing policy of aggressively attracting international businesses with low tax rates, it's a very popular policy amongst the people in Ireland, and in fact until their government foolishly panicked and committed to a full bailout of their banks their economy was doing great. If the Italians are now mad about it, they have two choices:
1) Start rolling back the EU single market, then they can pass rules that say "if you want to sell stuff to Italians, you must run your business out of Italy and pay whatever taxes we want to do that" (of course this means some companies won't bother)
2) Deal with it and find other sources of revenue, whilst enjoying the fact that when Italian companies sell to the Irish, the Italians get to keep the corporate tax from that.
Right now governments are trying to do both simultaneously, which is why they grind to a halt in an internal deadlock of contradictions and you get bizarre setups like companies buying things from themselves.
Apple specifically will "solve itself" after a while because probably, Ireland will start making them corporation tax in Ireland safe in the knowledge that it's still more appealing than the alternatives. However this will not satisfy other members of the EU who dislike tax competition.
By the way, your post is very emotional. Tax should not be an emotional topic. Tax is (or rather should be) a technical matter in which people analyze the most efficient ways to raise the revenues governments need to function. Whether corporation tax is even a good idea at all is a matter of some debate in academic circles - the fact that you're trying to tax an entity that doesn't actually have any specific physical location is one reason why everyone ends up feeling like it's "not fair".
Technically it's tax avoidance
Avoidance is a synonym for evasion. A distinction without a difference whether it is legal or not. They might be obeying the letter of the law but it is tax evasion nonetheless.
Corporations like Apple pay less in taxes because they can find loopholes.
We call them loopholes specifically because they present a way to do a run around the intent of the law. Simply by speaking English correctly you have doomed your own argument.
"You're right," Fisheye says. "I should have set it on 'whip' or 'chop.'"
And a lot of eu states are not happy with the way Ireland behaves over this - I suspect that a quick cut to the CAP (farm) subsidy and removing it from the list of "poor" countrys that get EU infrastructure funds would bring Ireland into line.
Because when the most important factor for making money is having money, you get a vicious circle where a small group ends up looting the entire economy, then using their newfound wealth to buy laws to prevent anyone from rising to challenge them. The scheme finally collapses when the plutocrats start believing their own lies about the system being just and fair, fail to pay enough for maintenance because the serfs deserve their fate, and cause an economic collapse - which is the phase we're in now. The next will be popular uprising, the signs of which are already visible in the form of Occupy movements, the rise of European nationalist parties and even the Tea Party, misdirected as the last might be.
The interesting question is how much damage resetting the cycle will cause this time. The last great cycle, the one associated with the Industrial Revolution, saw the rise of communism and fascism as reactions to the predations of the plutocrats. The end results were Hitler, Stalin, Mao and a number of lesser (or at least less powerful) monsters, and perhaps a hundred million deaths. How many people need to die this time around?
It's really up to people like you: will you continue following ideology and distorting everything to fit it to the bitter end, or do you acknowledge reality at some point?
Forget magic. Any technology distinguishable from divine power is insufficiently advanced.