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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.
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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.
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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.
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.
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.
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. :)
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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).
Ireland has corporate taxes, they are just MUCH lower than most other developed countries. So Ireland gains by taxing these corporations. It is extremely lucrative for Ireland because they get billions in tax dollars from the shell company that only has a few employees. The social cost to Ireland is nil compared to the tax revenue, but quite the opposite for Australia.
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.
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.
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...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.
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.