Slashdot Mirror
Apple's Luxembourg Tax Deals
Presto Vivace sends a report from the Australian Financial Review on how Apple uses a holding company based in Luxembourg to avoid taxes on its iTunes revenue. Quoting:
The 2011 accounts for iTunes Sàrl [the holding company] give the first inside view of how Apple accounts for its growing earnings from digital content. They are part of a massive leak of Luxembourg tax documents uncovered in an investigation led by the International Consortium of Investigative Journalists. Remarkably, the accounts show Luxembourg has been more effective in extracting tax from iTunes than Ireland has with much larger Apple sales. Turnover for iTunes Sàrl exploded from €353 million ($508 million) in 2009 to €2.05 billion in 2013. Secret appendices to the 2011 accounts break down some of Apple’s costs. It shows that Apple takes a third of iTunes’ revenues as its gross profit margin. The 2011 figures showed that a flat 50 per cent of this gross profit was paid in intercompany charges.
(Followup on a similar strategy from Amazon we discussed last week.)
They're paying what they should be paying.
All business done in the US pays US taxes. That is: if iTunes sells $5 million of songs in the US, Apple pays taxes on $5 million of revenue. Simple enough.
At the same time, any US company which sells something to Japan, Germany, France, Britain, and so on also pays taxes on it. If iTunes sells $50 million of songs in Europe, Apple pays $50 million in taxes to the US.
All Apple has done is moved their iTunes operations under another company headquartered in Germany. When iTunes sells $5 million of songs in the US, Apple pays US taxes on $5 million; but when iTunes sells $50 million of songs in Europe, Apple doesn't pay the US shit.
You may notice that the US is trying to tax businesses for doing business in the US, and also tax US businesses for doing business outside the US. US businesses are simply moving their non-US business outside the US, which is where it is anyway.
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Until we get away from the definitions that:
1) a corporation exists only to increase shareholder value
2) it is managements "fiduciary responsibility" to only "increase shareholder value", i.e. make the most profits possible
3) a corporation is a legal person, with all of the rights but none of the moral compunctions
We are going to have corporations that act by definition as psychopaths: amoral, antisocial, remorseless, uncaring, uninhibited, greedy and evil. They will act as unlawfully as they are permitted to.