“Ireland said on Tuesday it was not to blame for Apple Inc’s low global tax payments and had no special rate deal with the company after the U.S. Senate said it paid little or no tax on tens of billions of dollars in profits stashed in Irish subsidiaries,” Conor Humphries and Padraic Halpin report for Reuters.
“The Irish government, which has seen the luring of U.S. multinationals with low taxes as a key part of its economic policy since the 1960s, said its system was transparent and other countries were responsible if the tax rate paid by Apple was too low,” Humphries and Halpin report. “‘They are issues that arise from the taxation systems in other jurisdictions, and that is an issue that has to be addressed first of all in those jurisdictions,’ deputy prime minister Eamon Gilmore told national broadcaster RTE on Tuesday. Apple said in a comment posted online on Monday it did not use “tax gimmicks”. It said the existence of its subsidiary Apple Operations International in Ireland did not reduce Apple’s U.S. tax liability, and the company would pay more than $7 billion in U.S. taxes in fiscal 2013.”
“According to the congressional report, Apple’s Tax Operations Head Phillip Bullock told the subcommittee that the company had obtained a special low tax rate through negotiations with the Irish government below the already low standard rate of 12.5 percent. Apple said this had been 2 percent or less for the last 10 years. Ireland’s European Affairs minister Lucinda Creighton denied any special rate agreement,” Humphries and Halpin report. “‘There is no such deal. There is no deal for any company to pay 2 percent corporate tax in Ireland – that is erroneous,’ said Creighton, a barrister by profession. A spokesman for Ireland’s finance department said Ireland’s tax system was statute based, so there was ‘no possibility of individual special tax rate deals for companies.'”
Humphries and Halpin report, “Patrick Coveney, the chief executive of Greencore, one of Ireland largest companies, told RTE radio that it was politicians across the world who were responsible for these tax treaties and tax structures. ‘I find it frankly a little frustrating that it is them who are piling in and criticising international traded businesses who are merely availing of the tax environment that they have put in place,’ said Coveney, a former president of the Dublin Chamber of Commerce.”
Read more in the full article here.
Those who spread FUD and BS on Apple over the tax issue, can not do the math.
Lets say, Apple earned $63 billion of before tax profits overall last year. Abstractly, of those about $22 billion were earned in the USA.
However, the actual distribution of earning is different, because Apple have over 50 000 workers in the USA, and well as handles all of research and development in the country, let alone billions of dollars costing data centres and such. Sales that generated abroad have just a small portion of these huge expenses that Apple bears in the USA.
So in reality before tax profits for Apple in the USA are not $22 billion, but lets say, $18 billion (or even less). And viola: Apple pays over $6 billion of taxes, because 35% of $18 billion is … $6 billion.
HINT: no any schemes are used for profits that earned in the USA. No off-shore accounts, not moving the money here and there, no nothing. ALL real sales, ALL real expenses, ALL real taxes.
Apple said the effective tax rate for the last year was 30.5%.
If you take EBT from my example before deductions (such as possibly data centre investments, et cetera) — $22 billion — and apply 30.5% effective tax rate to it, you will get $6+ billion of federal taxes.
So it seems that my rough and approximate estimations are about right.
Someone is wrong.
I’ve been busy today and watched as much of the hearing as I could. Frankly, I thought the tone was too often anti-Apple and should have been more focused on the loopholes themselves rather than any specific one company.
Apple apparently got too big, too fast for the likes of the media and politicians. You can also throw in eco-friendly organizations, too. They have flagged Apple openly because no one gave a shit what Dell or HP has done since 2006.
I’m all for raising awareness about this issue because I think the code is too complex and we need to find better ways of “capturing” these funds for tax revenue that makes it more fair across the board.
I’m no expert at all, but I would support a modest increase in taxes on stock earnings and dividends and just drop the corporate rate to zero so there is no incentive at all to keep money overseas. Eventually, money made by companies should filter its way into the economy (otherwise, what is the point of making money?)
To me, “earnings” are your salary and the money you make off of investments (be that in the form of dividends or profit from selling shares at a net gain — capture those at fair rates and make much of this a non-issue.
Someone tell me I’m wrong because I don’t write this with lots of confidence . . . it just seems logical to me.
Your suggestion is fine. I’d take it a step further by somehow coercing companies to pay their employees more.
Take away corporate taxes, but in return coerce higher salaries/rates across the board. Quid pro quo.
This makes sense with companies that are making a killing but could really hamstring companies that are not. It also would not please investors who may expect dividends.
But where you’re right is that higher salaries leads to more taxation . . . I shudder every month when I pay the IRS withholding taxes to my employees — it’s a lot of money that me and my relatively low number of employees make together and we send a lot of our profit straight to the government.
To see larger companies skirt some of that based on their structure is disheartening, I won’t lie.
The real issue is everybody wanting a piece of the pie. Happens all the time with human beings. Somebody does well and everyone around them gets greedy to snatch a piece of that huge pile of cash. The government is just the latest group to get on board the “give me some” band wagon.
Again, Apple did nothing illegal. When you do your taxes you look for every legal tax reduction you can find, so did Apple.
Question: does the Constitution apply to multinational organizations, or just individual people?
Corporations are people, too. Somehow. I’m not actually sure how.
“Question: does the Constitution apply to multinational organizations, or just individual people?
US LAWS, the Constitution and Statutes, directly affects them, if multinational is a US corp, and indirectly if they “do business in the US”…Otherwise if not a US multinational, and don’t do business in the US. “no”. It is extremely complex and often decided by special policy and political deals, such as Presidential Executive Orders and negotiated “requirements” by foreign countries.
(The Apple Boys just finished at the hearing) I wonder if Cook still feels like this wasn’t a persecution of Apple now? It sure ended up looking like one to me.
Agreed. Anytime the questioner is trying to get you to simply answer “yes” or “no” you know you’re being persecuted. Senator Levin came in with an agenda of getting Apple to admit to fundamental skirting of law and wasn’t able to get it. Embarrassing. I’ve posted emails to four of the senators on that panel with my thoughts. I hope others do as well.
Pay your taxes where you make your profit.
Ok this is odd. Apple saying one thing and Ireland denying it.