Apple corporate structure reveals complex Irish tax web

“Occupying a single floor of a three-storey building in a suburban Dublin office park, Western Union’s offices are notably modest for the international headquarters of the world’s largest money transfer firm,” Padraic Halpin, Carmel Crimmins and Himanshu Ojha report for Reuters. “The set-up is typical of swathes of U.S. companies using Ireland to cut their tax bill. A Reuters analysis of Irish and U.S. filings shows that more than 40 percent of the S&P 500 have registered subsidiaries in the country.”

“That nexus, which has created over 100,000 jobs for Ireland, was laid bare when the U.S. Senate revealed that technology giant Apple had paid little or no tax on tens of billions of dollars in profits channeled through the country,” Halpin, Crimmins and Ojha report. “Ireland, which has courted U.S. business for decades, rejects the Senate’s claims that it is a tax haven, but the case has damaged its reputation as it seeks to emerge from an EU-IMF bailout and its export-focused economy dips back into recession.”

Halpin, Crimmins and Ojha report, “Company documents in Ireland and filings in the United States shows that many firms have multiple units in Ireland, where corporate income tax is 12.5 percent – about a third of the top U.S. federal income tax rate of 35 percent.”

MacDailyNews Take: There’s the problem.

Halpin, Crimmins and Ojha report, “Apple, which employs about 4,000 people in Ireland, is just one of many companies that route money through the country to cut taxes on company profits and fund investments… At least 206 of America’s largest 500 companies by market capitalization have one or more subsidiaries in Ireland, Reuters research showed.”

Read more in the full article here.

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25 Comments

  1. If theres a loophole clever accountants will find it. It is a little cheeky to sell to the UK through a company subsidiary in Ireland and not pay taxes to the deserving country, as I’m pretty sure Apple sell a whole lot more to the UK. Apple aren’t doing anything wrong by law, but in the eyes of a UK consumer it doesn’t look good – not does having to wait an extra few days for your iPhone or Mac to be shipped from Ireland.

    1. It’s not cheeky, it’s tax law. Tax laws are horribly complex in any one country, but now throw in sales in dozens of countries and you really have a spaghetti-gordian knot mess on your hands.

      I don’t blame these companies one bit for seeking out and finding ways to pay less in taxes. You do it for your personal taxes. I do it for mine.

      So long as its legal, what’s the problem? If countries don’t like it, then they can change their laws accordingly. Countries can even band together to create a system which doesn’t favor one country over another. Of course, if private companies do that, it’s collusion and an anti-trust violation.

      1. The problem is country X has no incentive to make its laws less favorable to business, so the only option is for country Y to lower its taxes to match. So the world eventually winds up at the least common denominator.

        A similar situation evolved with consumer interest rates within the US. A single court ruling, that the laws of the state issuing a credit card applied no matter where the consumer lived allowed all of the US credit card companies to move their operations to South Dakota, which has no usury law. From that time on they were able to raise interest rates and fees without control by any of the state governments and South Dakota sure isn’t going to act in the best interests of the rest of the country.

        The bottom always wins.

        1. Interesting background on credit cards…I always wondered how they were getting past the usury law. Even when treasury rates were near zero, most credit cards have stayed at 15%, 20% or even higher. Incredible…

          1. We really need to pay attention to both Congress and the Courts. They are not the benign actors we’d like to believe they are.

            The correct act for Congress after the Court decision in 1978 would have been to pass a national usury law. Guess Congress thought free enterprise and competition would take care of the problem. Or something like that.

    2. When you buy something go you shop around for the cheapest price or buy stuff at the store you ‘should’ buy from? Do you look for the cheapest gas station around or buy your gas strictly on name brand?

      If you are price conscious anywhere on any purchase for anything then you have zero credibility for claiming Apple should not do exactly the same thing that you do.

      Not only should Apple do what it does but it has an obligation to its shareholders to do so.

      Also notice that Ireland has corporate sales taxes, they are just low.

      1. From a business stand point yes you’re right. From a moral perspective it doesn’t put Apple in a good light, especially in times of welfare cuts and higher cost of living. My main gripe is having to wait longer for everything I purchase from The official store. Due to the arrangement they have with Ireland, the goods are not stored in the UK (or at least the stuff I have ordered).

        1. Sure, it might not “look good”… Like Tescos opening mega super super stores in Central and Eastern Europe, the likes of which they don’t even have in the UK which is more sensitve to the Walmart kind of invasion.

          I live in Netherlands, and my online Apple purchases too are shipped from Ireland.

          What this says is that Apple has one main center of operation and distribution for Europe. That is entirely in keeping with the spirit of the EU and makes sense. Most European Apple sales are through the European online store (with various fontends in each language). That is normal procedure. UK just happens to have the bulk of European brick and mortar stores, so that is why you may feel this puts Apple in a bad light.

          Really, there are 4000 Apple employees in Ireland, and the products are actually shipped from there. The money from online sales is being booked there in the first place. Good grief, The way the negative articles portray it, you would think that negative articles portray all this, you would think Apple has only a PO Box in Ireland and TRANSFERS its revenue there BEFORE paying ANY local taxes ANYWHERE.

          1. Further, Amazon, for example, has its main distributcenter in UK (edge of Milton Keynes i believe). There is no Dutch Amazon store, but they will ship to me from UK. Is the Dutch govt complaining it receives little to no tax revenue from Amazon?

        2. Sean, in economics, a tax is just one more cost that is included in the PRICE of the product sold. . . Nothing more. Businesses seek to reduce costs to maximize profits, of course, but ALSO to lower prices so that they can attract more customers. The hard fact is that in the cruel world of economics, ALL TAXES ARE PAID BY THE CUSTOMER! This is a fact. Any tax a corporation, a business of any kind, pays comes from only ONE SOURCE, the price the customer pays for the goods and services that business sells.

          NO BUSINESS PAYS ANY TAXES… ZERO, NONE. NADA.

          Their customers pay ALL of the taxes. All of them. There IS no other source.

          1. I guess my point has been side tracked slightly… I am not complaining about business practice or capitalism. Apple could potentially deliver better service and sell at a fairer price in the UK. I’d like to see parity of prices all around the world, at the moment there is quite a large difference between what is paid in the US and the UK for the SAME product. For instance, Macbook Air is around £660 in US and £850 in the UK. As a loyal Apple customer I do feel a bit cheated. As you can tell, I am not well read on the tax system, but something has to change.

            1. Are you takng “sales” tax into account? Prices quoted in Europe will INCLUDE VAT, typically around 20%. Prices in USA will EXCLUDE state sales taxes, typically around 7%. When you conpensate for this, then the prices are a lot closer than they at first appear.

      1. True but this fact won’t stop the hypocritical liberal class bigots from voting down your post even while they shop around for the cheapest prices on things blissfully ignorant how full of shit and self serving my hypocritical they are.

        1. That’s because you are conflating two entirely different situations, twilightmoon. You and botvinnik (and a few other notable highly vocal participants in this forum) have perspectives on government that are rather extreme and far outside that of the majority (as evidenced by the results of the last election, for example).

          You take reasonable viewpoints (government should tax as little as possible and operate as efficiently as possible while maintaining critical functions and infrastructure) and skew them into utter rubbish. Most of the people on this forum tolerate your incessant blather only because we don’t have any control over MDN’s policies.

  2. As Eric Schmit said, dont blame companies for obeying current tax laws. The key industrial economies are losing billions to places like Ireland who are able to offer low rates for gear sold into other EU states. This is a government probem and the electorate should only vote for parties that will legislate to prevent this tax avoidance. It sticks in the craw that Starbucks pays many of its staff less than a living wage and has the UK government pay the workers benefits to raise their incomes – and get no tax in from Starbucks to cover the costs meaning that we are all forced to help Starbuck maximise their profits!

  3. I guess these companies should give the government money out of the goodness of thier heart.

    The story could have been 60% of the S&P 500 companies not fully utilizing the US tax code. But who would read that.

  4. Gotta love how every pundit quotes nominal tax rate, omitting all the exemptions and rebates that make US corporate tax rate on many, if not most, domestic goods about the same as Ireland’s. Apple and other corporations use Ireland primarily to funnel cash that would otherwise be taxed in the EU, not the USA. Obviously this is a dynamic situation that also strongly depends on individual state laws too. If Apple truly needed to reduce its tax expenditures, it would not base most of its operations in California. Apple could build its Mothership in any of a dozen rust-belt cities for a fraction of the cost, plus gain whatever special tax incentives that the warring states will compete to encourage the relocation. It’s a stupid game, and the only winners are corporate executives who pocket the imaginary savings.

      1. Corporations relocate all the time. There is nothing magical about computer engineering in CA that can’t be created elsewhere: Boston, Ann Arbor, Madison, the NC research triangle, you name it. Each a fraction of the cost of the Si Valley.

        Likewise, brokers can do their trades from anywhere on the planet. Living in the most expensive city in all of the Americas is a sign of Wall Street corruption, not wise financial management.

        Stop whining about the @#$%^& tax rate while drinking $20+ / gallon Fiji water, already.

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