Tuesday, 21 May 2013

Computer giant Apple avoiding $25 billion in taxes with secret Irish tax haven


 Senate committee accuses Apple of tax avoidance via Ireland and offshore accounts
Computer giant Apple has been accused of using offshore operations in Ireland to avoid billions of dollars in US taxes. The total for Ireland may be as high as $25 billion over the past three years.
A Senate permanent subcommittee on investigations says in a memorandum to senators that Apple exploited a loophole between the tax laws of Ireland and the US by not filing an income tax return or paying any income tax for one of its Irish subsidiaries in either country for five years.
Irish Foreign Minister  Eamon Gilmore denied Ireland was being used as  a tax haven.
“They are  issues that arise from the taxation system in other jurisdictions and that’s an issue that has to be addressed first of all in those jurisdictions,” he said.
The Irish Times and The New York Times report on the claims that Apple used a complex web of offshore entities, including two Irish subsidiaries which it claims are not tax-resident anywhere, to avoid paying billions of dollars in US income taxes.
The report says the investigation brings the use of Irish companies to shift taxable US income to offshore firms in Ireland and substantially reduce the tax bill of major US corporations under intense public scrutiny.
It says Apple was incorporated in Ireland in 1980 and reported income totalling $30 billion from 2009-12.
A second Irish subsidiary, Apple Sales International, which the computer manufacturer claims is also not tax-resident anywhere, had sales revenue of $74 billion over the same period.
The report adds that the subcommittee claims that the iPhone and iPad manufacturer has negotiated a tax rate of less than 2 per cent with the Irish Government. This is significantly lower than the State’s 12.5 per cent corporate tax rate.
The sub committee says Apple has used Ireland as the base for its “extensive network of offshore subsidiaries”.
Apple chief executive Tim Cook is to appear before the Senate subcommittee at a hearing on Tuesday.
In response to the report, Apple said in testimony to the subcommittee: “It should be emphasized that AOI [Apple Operations International] does not reduce Apple’s tax bill in the US.
“If AOI did not exist, the funds it receives from other foreign subsidiaries through dividends would simply remain in the custody of those subsidiaries and would not be subject to US corporate income tax.”
The report adds that the subcommittee has highlighted how Apple has taken advantage of a difference between Irish and US tax residency rules.