“The British, French and German governments launched a joint initiative on Saturday to crack down on tax avoidance by multinational companies that will be presented to a G20 finance leaders meeting in July,” Reuters reports.
“German Finance Minister Wolfgang Schaeuble said the trio would examine ways to close loopholes that made it too easy for companies to decide where they paid taxes, particularly on ‘mobile income’ such as interest, dividends and royalties,” Reuters reports. “The tax reform plan comes at a time when governments are facing public outrage over how some multinational companies handle their international tax affairs.”
Reuters reports, “In Britain, the issue of multinational tax avoidance has risen to the top of the political agenda, after revelations that companies such as Starbucks, Apple, Google and Amazon were using complex inter-company transactions to cut their tax bills.”
Read more in the full article here.
Related articles:
Paris-based OECD urges international tax clampdown on Apple, other multinational corporations – February 12, 2013
Apple paid $6 billion in U.S. federal income taxes, 1/40th of all corporate income taxes collected by U.S. government in 2012 – January 5, 2013
Google, Apple, eBay shouldn’t pay taxes – people should pay taxes – November 25, 2012
So how much did Apple really pay in taxes? – November 1, 2012
Apple’s showdown with the U.S. government over taxes on offshore cash – July 13, 2012
Apple‘s $74 billion tops list of U.S. tech companies’ overseas cash – July 9, 2012
Apple’s dividend move puts spotlight on foreign cash holdings, repatriation tax reform – March 20, 2012
Apple: Good start; and what about the overseas cash? – March 19, 2012
Apple’s foreign cash hoard piles up: $54 billion and rapidly growing – January 11, 2012
Senator John McCain eyes Apple’s $54 billion overseas cash pile – November 3, 2011
Google joins Apple in push for U.S. repatriation tax holiday – October 3, 2011
Apple lobbies Obama for tax holiday, wants to bring overseas bounty home – August 24, 2011
U.S Senate Democrat Schumer allies with Apple, other multinationals on repatriation tax talks – June 21, 2011
U.S. companies push for tax break on foreign cash – June 20, 2011
Apple, Oracle, Duke Energy, others organize lobbying blitz for tax holiday – February 17, 2011
Like it or not, tax avoidance is not against the law. Government sets the rules and when entities find ways to make it work to their advantage instead of to the governments, people get their knickers in a bunch.
…GOOGLE TOO
The “problem” is that governments are merely national whereas companies are global.
So companies can use their multi-national coverage to build up multiple loop holes across various territories to avoid paying any tax.
The tax maneouver Apple and Google (even more so) are doing is called “Double Irish Dutch Sandwich”
The NYT have a handy chart for those not bothering to look it up http://www.nytimes.com/interactive/2012/04/28/business/Double-Irish-With-A-Dutch-Sandwich.html
Thanks for the link. Very informative graphic.
I’d be willing to bet some of the provisions in Irish law were put there to attract a company promising jobs. Ireland expected manufacturing jobs, what they got were tax evasion specialist jobs. That’s white collar stuff, right? Much better than nasty old factories. Seems to me the intellectual property goes in where and when the product is manufactured and is embedded after that, not a severable aspect that is to be taxed at a different rate.
Apple needs to change their tag line to “Designed in California, Manufactured in China and Taxed nowhere.” (Actually, I’m guessing Apple is somewhat above average in compliance with the spirit rather than just the letter of the tax code. But that is a statement of faith, rather than available facts.)
‘Like or not’ there are many USA, UK, EU companies who are not global and are thus seriously disadvantaged tax wise. I believe tax should be a level playing field for everyone.
I have a bunch of twisted knickers!
Even better, their owners are still in them!!!
Commies!
Actually tax avoidance is against the law, however tax minimisation is not.
I would assume all those “handles” are perfectly legitimate.
More & more GovernMENTAL extortion practice at work across the globe.
Why are we surprised that Apple Inc. or any other company should take whatever ‘legal steps’ they are entitled to in order to ‘minimise’ paying tax? This so called ‘indignation’ is really rather misplaced. If my personal tax accountant could find a ‘legal tax loophole’ for me which would help in minimising tax payments, then why shouldn’t I take advantage of it?
Because liberals think it is everybody’s duty (see what I did there…?) to pay more.
‘Everybody’; People who make more than I or have a different political/religious view and are white.
No, liberals think everyone should pay their proportionally fair share of the taxes necessary to operate government. Wealthy individusls and corporations should not receive extra tax breaks simply because they can afford to pay lobbyists to influence tax laws to the point of being unfair.
Problem with that, outside of payroll tax to cover FICA, SUTA and FUTA — HALF — of the employed don’t pay any taxes. I guess this is the Liberal definition of “Fair Share”
I don’t believe that is entirely true. There are sales taxes, tolls, and the myriad of taxes that are drawn out of our veins every day. Simply because the unemployed don’t pay income tax, you cannot say they pay no taxes. Just ’cause Fox says something, you don’t have to believe it. It’s no different from any other news network.
This is the subtle mechanism by which companies like Wal-Mart receive government paid welfare. As long as companies like Wal-Mart can pay their employees minimum wage and those employees pay no taxes, and also qualify for government assistance, that assistance is money in Wal-Mart’s pocket – money they don’t have to pay in wages and benefits.
There is a problem with this notion. It’s ambiguous. You can’t define “fair” in a way that everyone can agree on… let alone how to make them “proportionally” so. Even the Founding Fathers couldn’t agree on how to define
“fair”. It’s why we have a two house congress.
I happen to believe no form, no system of taxation can be “fair” as I view taxation (all taxation) as inherently unfair because taxation is simply “legal” theft. Any and/or all motives for taking money (I have earned) may be noble and pure, but motives are irrelevant. It’s still theft and it’s no less so because the state calls it “taxation”. Any “justifiable” reason is nothing more than rationalization.
And those who support taxes are aiding and abetting theft… which makes them thieves as well.
As the Bard said, “What’s in a name…” and as Aristotle said, “A is A”.
So you don’t like taxation? I don’t suppose that you forego the use of bridges and roads? Or scoop water out of the local creek because it would be hypocritical to use the water piped to your home? The list goes on…
Your argument is so extreme and so full of holes that it reeks of insanity. You make TowerTone sound like a liberal. I can only assume that you favor complete anarchy, because a government cannot function without taxes of some sort. Perhaps you should take a long trip across the world seeking your taxless nirvana. Perhaps central Antarctica would suit you?
Do you work for the government? Federal, state, county or city? A teacher perhaps? Just wondering.
There is something about extreme positions that (some) people are attracted to. The consequences of ‘no taxes’ would be a nightmare at all levels of living. Your attempt at categorizing a very logical statement as one coming from one working for “THE government” would say you don’t really understand basic pragmatic economics. No taxes and no government might be a bold experiment but would need an experienced Hollywood actor reading from a script to even make it palatable for believers. Not necessarily even a great actor, just an actor. Hmm, thinking of a name.
Would lower taxes be better..yes.
Would a Bladerunner society with privately run judicial system, road/water/electric/heating systems, police and military has definite appeal to scriptwriters. No end of material for a film. Just not something I prefer to see in the streets, more on the screen.
Jeez! You alright? I’m simply tired of seeing overpaid overcompensated government workers. I don’t know what you’re taking but it must be powerful! Be careful. Most of all don’t read your own rants especially when youre in this state of mind. They’re not written very well.
Sorry. I am not buying that. First of all, it doesn’t matter how much they tax, they will spend more. Republicans can be guilty of this also, just not to the degree of the left or they will lose their seat (thank you Tea Party….)
Second, when you say ‘proportionally’ and then claim they have all the tax loopholes while many in a smaller bracket have automatic deductions, you lose a few points. Also, many loopholes are made to encourage the flow of money a specific way, so thank the Feds for much of that.
Yes, I am also sure many lobbyist help to defray taxes by ‘encouraging’ lawmakers to make loopholes. A simpler tax structure would eliminate many of these.
And finally, I hope you are not implying the loopholes are not influenced by the left. I mean, really, I hope you know better…..
Just not to the degree…really? Care to count the borrowed dollars spent in 2001-2009? Or 1981-1989? Lots of deficits, lots of spending, lots of borrowing. The primary difference is the allocation of the spending – quite a bit more goes to the DoD during those years, for instance.
You are correct in that lobbyists and loopholes are largely party-agnostic. Greed does not confine itself to a particular party. But to equate major tax loopholes with penny ante “automatic deductions” is ludicrous.
Tax simplification is the key – eliminate tax write-offs and the lobbyists and politicians won’t have any toys with which to play. Tax simplification would cause a few problems, too, starting with lots of lost jobs at H&R Block and other tax preparation companies, law firms specializing in taxes, etc. But, in the long run, it would be worth the pain.
Everyone’s FAIR share of taxes is zero. Taxation is theft.
Irresponsible but job, you are.
correct.
Apple should be praised rather than criticized. How much added VAT has been collected through sales of iPhone and other smartphones and the related data plans versus the state of the industry without iPhone. VAT is 15 to 22% in the various European nations and Australia which is also complaining. In the US, states get sales taxes and some income taxes – Feds get income taxes on US sales and a claim against taxes on foreign sales when the associated dollars are repatriated. Why are they not complaining about the loss of income tax from the banks who have shielding their future income from taxes by the exorbitant write offs from their stupid real estate lending. GE is another one who also pays very low taxes and had a lot of write offs.
Googe on the other hand is another story. Since it has minimum hardware sales in Europe, I believe it pays much less VAT. Not clear how the advertising $flow get taxed, but it is probably much easier to circumvent VAT and income taxes.
And this goes precisely to the heart of the problem with our economies. There are few morals any more, just the question, “is it legal, can I get away with it?” It’s what happens when lawyers take over. Never mind if your action is honest or not, or whether its the right thing to do or not, or ethical. If you want more of Wall Street doing what its just done to us, go right ahead with this attitude.
You enclose an awful lot of terms in quotation marks. Is that to be read as “wink, wink, nod, nod”?
Some industries don’t need to be based in a given country. So, the government needs to attract them by letting them have some tax loopholes.
However, some industries have no choice because they need to be based in ALL countries….like Apple for instance. They need stores and online stores all over the world. With these countries the government does not need to attract them…..they come anyway. So now the governments want to block all loopholes.
Soon as the government starts to want these companies to invest in their countries again they will relax and start to make more loopholes. Take the US for example. You would think they want more investment in the US. They will get that as soon as they allow companies to bring in offshore cash without penalties.
Here’s a novel idea; why don’t the governments reduce their taxes ie down to Irish levels and then these companies won’t need to move their money around. They might even increase their overall tax take.
Isn’t Ireland bankrupt?
Not through low taxes, through low borrowing rates. Irish banks gave money away to developers who built houses that no one wanted. That bankrupted Ireland.
Obviously any multi-national company will attempt to minimise it’s tax liability by sophisticated means, but equally obviously governments will attempt to close off those loopholes.
We have the situation here in the UK where Starbucks UK pays Starbucks US a huge fee for intellectual property and as a result, Starbucks UK scarcely makes a profit on paper, although they boast to their shareholders that the UK is good business for them. As a result, Starbucks avoided paying any UK corporation tax at all for many years.
On the other hand, a UK based coffee chain is not able to do that sort of trick and pays many millions of corporation tax every year. The coffee sells for about the same price and the businesses are comparable, but Starbucks enjoys the huge advantage of avoiding corporation tax.
There are other examples too, such as Apple basing it’s on-line sales in Luxembourg, where sales tax is very low, but still charging consumers the rate of sales tax in the country where they live, so Apple pocket the difference between the two rates of tax. Similar techniques are used by Amazon and many others.
All that people are asking for is a level playing field so that multi-nationals pay the same tax as every other company which is trading in a particular country.
Are you saying that Apple doesn’t pay sales tax to the taxing authority on who’s behalf they collected sales tax from a consumer? I don’t know for certain but I don’t think that is the case, as evidenced by the lack of lawsuits from authorities all over the globe.
I know that if you purchase a copy of one of my apps in the US, you pay Apple both the price of the app and any local taxes on top of that, but I get paid (out of Luxembourg) my 70% cut of the app purchase price.
@Jim
Yes. Apple ( and others ) charges the consumer the local VAT rate ( sales tax ), which in the UK is 20% and in Hungary it’s 27%, but by being based in Luxembourg, Apple only pays 15% VAT on the services it supplies.
See VAT rates around Europe here.
http://www.vatlive.com/vat-rates/european-vat-rates/eu-vat-rates/
There’s nothing illegal about doing this sort of thing at the moment, but it’s the sort of conduct that many of the public feel is inappropriate and the politicians are talking about closing loop holes of this type.
At a time when people are paying higher personal taxes and governments are trying to spend less, having mega-rich multinational companies getting away with avoiding paying billions on their taxes seems unreasonable.
Bad publicity surrounding Starbuck’s tax avoidance in the UK meant that sales were seriously affected and Starbucks has since volunteered to pay additional taxes of 20 million GBP, but even that situation is rather confused.
http://www.guardian.co.uk/business/2012/dec/07/starbucks-tax-repercussions
Apple are not one of the worst offenders here in the UK and are not even in the major league of offenders, but they are sometimes mentioned alongside the bad offenders. I would prefer that Apple didn’t operate in a way attracts this sort of criticism.
Watch as Apple’s stock gets disproportionately affected…
Heaven forbid we take advantage of the tax policies written into law. I think I’ll continue to take the mortgage deduction, and let the companies take advantage of the deductions available to them. If the governments don’t like the laws, change them, but stop talking as if it’s some sort of scandal.
If anyone would care to search for the news about the proposed British Government action, you need to EXCLUDE the name Apple, because they mentioned Google, Amazon and Starbucks ONLY.
The real story here is that Reuters has chosen to add Apple’s name to the story. Reuters is insane in its anti Apple stance.
I agree with that somewhat.
Absolutely true. I believe it is mainly jealousy that an American corporation can be so successful in Europe.
@ Zeke
Similar criticism is also directed at UK companies that base operations in low tax countries. It’s not an envy thing at all, it’s all about fairness.
Referencing this particular article does not explain Reuters adding Apple to the story, nor the constant and historic bias against Apple shown by Reuters over the last few years. Petty jealousy does.
@zeke
on which rational or irrational basis would a “news” agency be jealous of one of the world’s greatest ever capitalist entities?
It could be argued that it is a chicken versus egg situation. Is it that Reuters has a bias against Apple, which then influences their readers, or are they pandering to the biases of their readers, which influences their writings? As a long time Apple investor over the last 10 years I’ve witnessed the bias of European consumers and media against Apple on a continuous basis. I’m not sure why. Is it a “not invented here”, European chauvinism? Is it the influence of European manufacturers like Nokia? Is it simply the age-old anti-American hubris on the part of many Europeans? Again, I don’t know. I do know that Reuters, over the past 10 years has repeatedly and consistently slammed anything Apple.
@ Jon T
While I agree that Reuters show consistent Apple hostility, it’s not at all unusual for other news sources in the UK to also mention Apple alongside the other multinationals that drastically minimise taxes by exploiting regional tax rules.
The inconvenient truth is that Apple has chosen to supply it’s services from a low tax country within Europe. However Apple’s retail stores pay taxes in the usual way as they are situated within the UK, so Apple still pays large amounts of tax, but Apple’s hands aren’t perfectly clean either.
hmmmm…. let’s see now, who owns reuters?
…. for that matter, who owns the federal reserve?
For those who missed the subtlety of j.eric’s reply, Reuters is part of the Thomson Corporation, who’s headquarters are in Stamford, Connecticut.
It’s not whether it’s illegal or not… I don’t think any one has suggested that anyone has broken the law… but in the US… these companies are begging for a “tax amnesty” day.. where then bring their overseas profits home tax free.
These companies knew what the law was when they sheltered their profits overseas, so to ask for a pardon to circumvent the law is, as far as I’m concerned, a really bad thing, and no government should cave in from the pressure.
The “tax amnesty” is so that the profits that these corporations have earned overseas – without the involvement of the US Government – and on which they have already paid taxes in the local jurisdiction can be brought home to the USA to make jobs and enhance the US economy. The current rules in the USA apply the all-but-punitive US taxes to such money, when the companies are trying to be loyal American corporate citizens and create jobs here at home. But it seems that the US government would rather that these multinational companies invest the money overseas and create jobs there rather than here at home. If you are not in favor of these companies NOT being penalized for trying to create more jobs in the USA – which is something that nothing requires them to do – then stop complaining about it.
This is nothing new. If we want to crack down on it… If we want. Not saying its good practice or bad we need tame same rules and tighter rules over the while EU. It’s not criminal but its called “Sophisticated Tax Planning”. Very few have know about this. Very few. And the public have know nothing about it. All, I mean all, multinational companies does this from every country. There were a big documentary about IKEA on Swedish television about a year ago where it was revealed that they did exactly this. Like Starbux. IKEA had set up a very complicated structure of shell companies, organizations and foundations where money were tunneled through. The Stores licensed the brand and the royalty was collected by a company in the Netherlands I think. This complicated structure had no other purpose than to avoid tax, even in Sweden. We still love IKEA in Sweden but I had absolutely no idea they did like this, no one did. They had help from outside Sweden by tax experts to set up the structure.
From a personal standpoint, just me. It feels strange I guess that you can recognize what you eat where you want and not where why sales are taking place. But. I don’t know that much about this to know if its good to crack down on this. It may mean less profitable companies, less jobs etc. I don’t know. Besides, it’s legal. It may be seen as ethically wrong but its not illegal. And as Starbux said. They employ so many people in the UK so the 20 million they freely payed in taxes it what it was is NOTHING compared to what Dtatbux have meant for the UK economy.
Not “recognize what you eat”.
It should be “recognize what you earn”
Sometimes iOS’s auto correct is funny.
What Apple should do is use it’s One Hundred and Thirty-Seven Billion U.S. Dollar war chest to engineer the collapse of both the pound and the euro. It’s time this lot of uppity eurotrash was put back to the days of the weimar republic where they belong!
And destroy a large market it sells in to? How stupid are you? Besides, a chunk of its “war chest” is in pounds and euros anyway.
Do you work for George Soros?
So global companies have figured out the complex tax structures erected by these governments, and now the very same governments cry that its unfair. So sad.
Perhaps it’s now time for a flattened and simplified tax structure, and put an end to such games.
yeah, those poor ol’ governments need all the money they can get, just not fair.
Well the social slum countries have to find a way to get more of other people’s money. God this reminds of that stupid ass French Revolution here we go again. I wish these HIV would just their people to get off their ass and more than 20 hours a week. That’s all thanks for reading
Oops it should read. I wish these gov. …and work… Damn auto fill sometimes