“If you’re worried that the European Union’s announcement that it is going to investigate Apple’s AAPL -0.56% tax strategies is going to create problems for the firm then you can stop worrying,” Tim Worstall writes for Forbes. “For the investigation isn’t into any of the things that people normally complain about over the company’s attitude towards taxes. Instead, it’s into something called ‘transfer pricing’ and it seems quite clear that there’s not going to be any problem here.”
“The things that people generally complain about concerning Apple’s taxes are myriad. The Double Dutch with an Irish sandwich for example (or is it the Double Irish with a Dutch? Not that it matters much),” Worstall writes. “Or the fact that it doesn’t really pay any tax at all on the money it stashes away in an Irish subsidiary. Or the manner in which foreign profits are not brought back into the US and thus don’t pay US corporate income tax. These are all things that Senators and tax campaigners have complained about. But the EU isn’t investigating any of these.”
“At least half of world trade these days is actually one subsidiary of a multinational company selling to another subsidiary of that same multinational. And governments are quite keen on the idea that they get to tax the value that is added within their own jurisdiction. But this is problematic: for estimating the value that is added can only be done by looking at the prices for whatever it is that is being bought and sold. But if we’ve got the same multinational on both sides of the bargain then they could, if they so desired, declare just any old price they made up. And thus they would be able to suck profits out of high tax jurisdictions and into low tax ones,” Worstall writes. “It’s quite clear and obvious that Apple does exactly this. So that’s what is going to be investigated. But there’s a crucial point here which means that while Apple is obviously doing this, sucking profits out of high tax jurisdictions and into a low tax one, that doesn’t mean that this is going to be a problem.”
Read more in the full article here.
[Thanks to MacDailyNews Reader “tom599” for the heads up.]
Related articles:
EU launches tax avoidance investigations on Apple, Starbucks, Fiat – June 11, 2014
Not in Taxes anymore: On site at Apple’s famous Irish ‘headquarters’ – November 2, 2013
Regan: U.S. tax code spurs loveless foreign corporate ‘marriages’ – May 13, 2014
Ireland to close Apple’s tax loophole, but leave bigger one open – October 15, 2013
G20 think tank OECD proposes blueprint for global crackdown on tax avoidance – July 19, 2013
Thomas Sowell on Apple, corporate taxes, and ‘the road to serfdom’ – May 28, 2013
Taxing Apple just taxes you – May 24, 2013
Don’t tax Apple, tax its shareholders – May 24, 2013
If Apple paid more tax, we might pay less or something – May 22, 2013
Apple CEO Tim Cook pounds another nail into the Keynesian coffin – May 22, 2013
Apple CEO Cook makes no apology for company’s tax strategy – May 22, 2013
Well said!!
Nothing wrong with this. If every country would have same tax systems that would fix the “problem”.
Aw, you mean vast, bloated bureaucracies won’t be able to fritter away Apple’s profits in endless, bottomless boondoggles that interfere in areas where they shouldn’t be meddling? Pity.
Fwhatever, for someone who undoubtedly benefits daily from a wide range of public services provided in the “vast, bloated bureaucracy” known as the United States of America, you sure do bitch a lot. A whole lot. All of the time, in fact.
I agree that there is waste in the U.S. system. Some degree of waste is inevitable in any system, but we can and should work to reduce it. Feel free to join the group of people who act for the common good rather than whining for your own sense of satisfaction. That should keep you sufficiently busy to limit your griping time on this forum. Please as Buttvinnik to join you.
If Google was doing this and Apple was not, the bitching and moaning and complaining here would never end.
No, the moaning is about people’s enamoring of Google, and Wallstreet’s giving it a huge POE multiple for nothing more than a stale business model of selling its users’ ID’s, hovering up the internet and putting out shoddy work, all while making about the same amount of money as iTunes.
Lol google is doing the exact same thing as Apple they have an Irish subsidiary as well
You might think that (to satisfy your need to justify your own beliefs), but you would be wrong, Tim. The Apple-related discussion on this forum is reasonably free of hypocrisy. Some of us carry a justifiable grudge against Microsoft and Google and Samsung. But the hypocrisy on this forum is mostly focused around the political rants.
I believe that Apple fans tend to be fans because they actually enjoy Apple products and actively choose to be part of the Apple ecosystem. A significant portion of those who oppose Apple are irrational, contrarian Apple haters who will go to great lengths of ignorant FUD to justify that hate.
But believe what you want, Tim. I will do the same.
Jeez! Read your own post. Anyone who thinks differently than you is a hypocrite and an Apple hater. That’s so bad it would even make a fanboy blush. Unbelievable!
I don’t know if there is nothing to worry about. We all though that about the iBooks case.
For all we know, the fix already in.