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How Ireland Got Apple's $9 Billion Australian Profit
elphie007 writes "An investigation by The Australian Financial Review has discovered how from 2002 to 2013, Apple has shifted approximately $AU8.9 billion of revenue generated in Australia to Ireland, via Singapore. The article states that last year alone, Apple Australia paid only $AU88.5 million in tax, or 0.044% of estimated potential tax liabilities. What's more, the Australian Tax Office has agreed that this arrangement is acceptable under Australian law."
Apple probably used Apple Maps to locate the tax office.
Slashdot, fix the reply notifications... You won't get away with it...
Remember moral != Legal, so just because they were able to cheat, doesn't mean they should. Also, they were under no legal or moral obligation to play silly buggers in order to cheat the Austrailians out of tax.
and yes it's cheating because they get to use all of the resources that Aus provides to allow business to make money the pay for almost none of it. That makes them little more than freeloading scum.
SJW n. One who posts facts.
http://en.wikipedia.org/wiki/D...
Ireland uses territorial taxation, and hence does not levy taxes on income booked at subsidiaries of Irish companies that are outside of the state. In the late 1980s, Apple Inc. was among the pioneers in creating this tax structure.
I guess not. They just siphon all the profits using Hollywood accounting over imaginary property to Ireland and stash them in Bermuda.
I don't know what summary or article you read, but it concludes that the minimal paying of taxes using this strategy is perfectly legal under both Australian and Irish law. The only precedent is that... business can continue as usual.
If you got $500 from writing a tech article, would you rather pay $200 of it in taxes or $2?
Also, doesn't Apple have a duty to shareholders to cough up as little in taxes as legally possible?
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I'm not sure that makes any sense. The article is about how this was a perfectly legitimate tax strategy. And if the world has their eye, that means Apple/Google/etc are watching everything... not the other way around.
If I were a dual citizen [Ireland/USA] could I shift all my income earned in the US to my Irish self and pay no taxes? After all, my Irish self needs lots of whiskey money.
He who forgets will be destined to remember. - EV
let's gather together and reinforce our anger/banding-together memes. AKA politics as intended.
It depends on whether the audience has the maturity to read about an event without automatically getting upset about it. Sadly, most Americans have been conditioned by repeated example to do the opposite. This is highly desirable from the standpoint of the media, because irritated emotions tend to shut down critical thinking.
It is a miracle that curiosity survives formal education. - Einstein
to be fair its a bit more complex than that, the rich do get stung for tax. In the UK you can see the proportion of taxation based on income bands. The top 50% pay 90% of the tax take, the top 5% earners pay 47.9% of the total tax.
Its eye opening how much the wealthier pay towards society compared to the poor. Now I don't mind that so much, except that the super-wealthy tend to have far too much compared to the rest of the population, and the general disparity between income is far to great nowadays, but to criticise the wealthier half of the population because the poor think the rich should pay more is a bit uninformed and a bit selfish.
Still, we need to get rid of these loopholes, make tax simpler, much simpler, and apply it to everyone.
What's the gain for Ireland?
I am sure they don't see much of the offloaded offshore profits.
So what does Ireland gain - other than may be few employees manning a registered office and may be a miniscule percent of the funds?
Is it a case of something is better than nothing?
Tat Tvam Asi
...Apple/Google/etc are watching everything
Do you doubt Apple's accountants and lawyers are watching the taxing policies in all countries to minimize their tax burden? iSeeYou.
Be prepared to be ashamed for things you do buy then. Apple tends to get singled out for some reason, but the things it gets criticized for are the norm, any transnational that is not doing them is just hurting itself and becoming less competitive. This is something that can only be fixed if the rules change in a way that effect all the companies, not something that public shaming of individual ones can help.
You don't have 'profits' if you had the 'expense' of paying royalties on imaginary property (IP) that is actually 'owned' by an offshore subsidiary of yours. That's what's happening.
Apple - nor any corporation - is not a charity. It's not their job to pay more taxes than they legally have to. Their job is specifically the opposite - generate as much value for shareholders as they can.
Any company that pays more than they have to by law should be questioned, or the shareholders should revolt. Actually... I can't think of any example of one that does, intentionally at least.
So - the issue is NOT with Apple - TFS even says that the Australian tax office agrees this is all above board - but the issue is with their tax system. It's structured to allow that, intentionally or not. There are all kinds of tax incentives in the world, and they're all there to encourage the right mix of business development and growth that the region needs. Essentially, tax is used as an incentive to offset the disadvantages that would otherwise naturally be there (labor cost, non-ideal locations, skill levels, etc.).
Don't be mad at Apple... EVERY company does this. Haters be hat'n, I guess. :)
I used to have a sig, but I set it free and it never came back.
No the problem is the wealthy are constantly arguing visibly and publicly that the poor are stealing from them, and that they should be allowed to opt out of supporting anyone. For things like food and medicine. Because it the super-wealthy are just so upset at looking at that big tax number on paper (they are not affected in any literal fashion whatsoever - if they were, they'd be middle class...who also are frequently on the list of "people who should pay more" from the super-wealthy).
Umm, you should read the article. It does not say 30%, it says 4%. In fact the word, or number 30 is not mentioned in the article at all.
The company is not tax resident in any jurisdiction ... The average tax rate for all jurisdictions in which it operates is approximately 4 per cent.”
But
In its ASIC filings the company reported pre-tax earnings outside the US of $US4 billion in 2009 and calculated that 4 per cent tax would be $US160 million. The accounts show the actual tax paid was only $US3.65 million.
Also
They pay no US tax either because US law disregards where a company is managed and only looks at where a company is legally registered.
When you cant win, ad hominem.
Maybe save the shame for the governments that refuse to fix these loopholes. Most refuse to do it because their politicians have direct or indirect ties to companies that would be negatively affected. The big Canadian example was Prime Minister Paul Martin and his family's company Canadian Steamship Lines, that avoided paying Canadian Taxes by running the ships under 'Flags of Convenience'. This wasn't illegal, but that doesn't mean it shouldn't be. And before the biased far left pipes in, I have no doubts Harper also has ties to many companies that wouldn't be happy with him were he to change the tax laws.
Yes, I agree, things do have to change.
BUT people will NOT take notice until you DO start shaming individual companies.
That's how change happens.
Just throwing up your hands and saying, "Oh well, it's the norm. It's got to change." Means nothing to people; which means you are not going to get the political class to do something about it. They'll just keep things the way they are because people won't notice.
People have to get outraged. They have to see INDIVIDUAL companies and INDIVIDUALS who don't pay taxes because of BS like this: see the Forbes 400 for many of the folks who legally dodge taxes because they made up the rules.
So we NEED to shame Apple, Google, GE, HP, IBM, and every other golbal mega corp that shifts profits around the World to avoid taxes. We need people like Warren Buffet to say, "Hey look, my secretary has a higher effective tax rate than I do."
And this bullshit of "well if Buffet doesn't like it, then he can pay more on his own!" doesn't cut it because there are HUNDREDS of other billionaires and centi-millionaires who are getting away it.
We NEED 1950s income taxes again - adjusted for inflation, of course.
so just because they were able to cheat
By definition what they are doing is not "cheating" if the tax department says it is legal.
As much as you and people like you want to paint Apple with the Evil brush, what Apple is doing is sound AND ethical . There's nothing wrong with shifting profits around in the way Apple is doing it, not legally OR morally.
"There is more worth loving than we have strength to love." - Brian Jay Stanley
Lol, as if any other companies are any better. Microsoft has been doing this for far longer than Apple, so has Amazon, Cisco, Dell, Dropbox, eBay, EMC, Facebook, Google, HP, IBM, Intel, LinkedIn, Logitech, Oracle, PayPal, Twitter and a number of other companies.
Custom electronics and digital signage for your business: www.evcircuits.com
He talks about social responsibility but he only means it if someone else has to pay for it.
No, Apple pays plenty (far more than any other company) for monitoring and reports on suppliers, for bonus to overseas workers that only Apple gives, for higher labor costs because they will not allow workers to be over-worked.
What does not make any sense is to pour MORE money into a giant engine of inefficiency that just wastes it. Why would anyone but a handful of government workers be better off if Apple paid more taxes? Instead Apple is in fact putting that money to good use in bringing production to the U.S. and other worker quality of life improvements - again, benefits to workers that every other company is utterly ignoring.
"There is more worth loving than we have strength to love." - Brian Jay Stanley
It is a requirement of international business – and in theory it must be done. Look up transfer pricing.
I will use Toyota as a good, solid concert example. Toyota Inc. designs a car, Toyota Japan builds the powertrain which it sells to Toyota USA, which builds and sells the car. The car generates $1,000. Quick – how do you divide the profit? If Toyota wants to pay Japanese corporate tax they increase the price that they sell the powertrain to the US, shifting profits to Japan. Or if they want to pay US corporate taxes they drop the price.
There are principles to guide how the profit should be shared but there are large subjective areas.
Why is perhaps why businesses should get taxed on income (aka revenue) like the rest of the tax payers.
Nothing would destroy the world economy faster than this staggeringly short sighted idea. A typical grocery store averages about 2% profit on sales. If, for example, a store pays $2.00 for a gallon of milk that it sells at $2.05 any tax that takes more than $0.05 make said grocer unable to restock his dairy case. How long exactly do you expect any store to remain in business under those terms?
Of course you're right. This is one of the reasons I drum the "all taxes are regressive". The rich can and will avoid as much tax liability, often quite legally (like this), while the poor and middle class cannot, because they do not have the resources. If you could spend 100 to save 1000 in taxes, wouldn't you?
There is a fix for this, a transfer tax, rather than an income tax. Tax money leaving your country. The easiest avoidance of these taxes is to keep the money in country, helping the country's economy. If money NEEDS to leave, then it provides an incentive to bring jobs home and use the resources of your own country.
Agent K: A *person* is smart. People are dumb, stupid, panicky animals, and you know it.
Perfectly legal....not perfectly ethical. There is a difference.
I've said, and will continue to say that we should not be imposing Taxes on things that we should be encouraging, like income. We should be taxing the things we want to curtail. Taxing income is downright EVIL, as it is a disincentive to actually working, which is only overcome by most people's need to better their lives.
How about instead of taxing income, you tax money being transferred out of state/country?
Agent K: A *person* is smart. People are dumb, stupid, panicky animals, and you know it.
That's 30% of profit, but loop holes allow companies to eliminate profit from their revenues. So you'll have a $100 million in revenue, but use loopholes to reduce your net profit to only $5 million, and sure you may pay 30% on that $5 million. But it should of been paid on the entire $100 million.
If I could file taxes like a corporation, writing off my lease/loan payment of my buildings, my vehicles, deducting my utility costs, and many other incidentals. The result is, that I could pay myself a mere stipend of $250/month (my spending account allotment) and you could tax me at 50%, but on $3,000 net profit I'd pay $1,500. Which is a heck of a lot less than what I presently pay for taxes on my revenue.
...Apple tends to get singled out for some reason
Advertising on column inches. A story about Apple gets more views than a story about some other company.
It's the same reason we keep hearing about "Google busses" being stopped, even though one of them actually belonged to Intuit; reporting it as a Google bus sold more ads per column inch than reporting it as an "Intuit bus" would have.
What we're saying is that the LAWS need to be re-written so that they can no longer legally pay such a low amount of taxes. And we are sharing this as an example of how extremely poor the laws are, and what a crappy job our government is doing in it's role.
And in Apple's case, they're in very gray territory. Creating a subsidiary company, and then charging it from another subsidiary company and insane license agreement. If it can be successfully argued that those charges are unrealistic (ie: no other company would pay even close to the declared charges) than it in fact becomes fraudulent.
It is akin to me taking an old coat, painting a quick picture on the back, taking it to Goodwill and exclaiming that it was worth $5,000 due to the art. And then claiming a $5,000 deduction on my taxes for my donation. If that $5,000 is an unreasonable value, than it is fraudulent. And I wager that the amount Apple is cross-billing between its subsidiaries would, if investigated show to be a fraudulent estimate of value. And thus in fact MAKE THIS AN ILLEGAL ACTIVITY.
If our governments would prosecute.
Go talk to your legislator if you are upset.
I can't afford to. According to the Supreme Court, campaign contributions are free speech. I spend all my speech feeding my kids and paying my mortgage this month.
Have gnu, will travel.
That would put its potential tax liability at $201B. 4.4% seems more likely.
How about instead of taxing income, you tax money being transferred out of state/country?
Because that would discourage free trade and international investment – it would tend to be even more distorting and inefficient than an income tax. Industries would tend to be local, smaller, and less efficient. And why would people want to invest abroad knowing that their income would be taxed when it comes back to them.
The US already kind of does this. As one of the kludges to handle the resident / domical issue money left abroad is not taxed. This has led to some weird situations which non-US companies avoid.
As to taxes being evil – that is a different kettle of fish. We can debate what type of levels of taxes there should be. My principle point is that the US use of dominical instead of residence / territory is highly inefficient and distortive. If we are going to have a corporate income tax then we should have the best one out there – which means using residence / territory like the rest of the world.
Side note - I have seen studies that corporate taxes under ~15% have a low to no impact on future investments.
Most businesses lose money their first few years. Under the current system they pay no taxes until they make a profit (and burn off their carried losses.) Under a "tax every incoming dollar" plan, even at only a minimal amount businesses on an already shaky footing would be even less likely to make it.