US Newspapers – Apple secretly moved parts of empire to jersey after row over tax affairs


Apple secretly moved parts of empire to jersey after row over tax affairs
Apple reacted to widespread criticism of its tax affairs by secretly shifting key parts of its empire to Jersey as part of a complex rearrangement that has allowed it to keep an ultralow tax rate, according to an analysis of Paradise Papers documents. The move affected two of its most important subsidiaries, one of which is thought to hold the key to a company cash pile worth more than $250bn £190bn. Over the past three years, Apple has reported paying very low tax rates on its profits outside the US – not much more than previously. But this remains significantly lower than all the major markets where its phones, iPads and desktop computers are sold – and less than half the rate in Ireland, where the company has many of its subsidiaries. Though Apple has done nothing illegal, the disclosure is likely to raise fresh questions for the technology company, which has been forced to defend its tax affairs. It may also prompt awkward questions about the nature of the new tax rules introduced by the Irish government and their timing. Apple refused to answer detailed questions, but defended the new arrangements and said they had not decreased the company’s tax payment anywhere in the world. “The debate over Apple’s taxes is not about how much we owe but where we owe it. We’ve paid over $35bn in corporate income taxes over the past three years, plus billions of dollars more in property tax, payroll tax, sales tax and VAT,” it said. “We believe every company has a responsibility to pay the taxes they owe and we’re proud of the economic contributions we make to the countries and communities where we do business.” Edward Kleinbard, a former corporate lawyer who is a professor of tax law at the University of Southern California, told the International Consortium of Investigative Journalists “US multinational firms are the global grandmasters of tax avoidance schemes that deplete not just US tax collection, but the tax collection of almost every large economy in the world.” Tim Cook announcing the new iPhone 7 in 2016. Photograph Marcio Jose SanchezAP Documents in the Paradise Papers show how Apple began to consider its options in 2014 following criticism of the way it was doing business through Ireland. A year earlier, a bipartisan US Senate committee had pilloried the company for seeking “the holy grail of tax avoidance”. It highlighted practices that had saved Apple from paying billions of dollars over decades. The 40page analysis published in May 2013 described how Apple had incorporated one of its main subsidiaries, Apple Operations International AOI, in Ireland in 1980. But the subsidiary had “no employees and no physical presence in Ireland … and holds its board meetings in California”. Senators highlighted two other Apple subsidiaries in Ireland, Apple Sales International ASI and Apple Operations Europe AOE, which were also in effect “stateless”. The scale of the tax avoidance was huge, the senators said. They described Apple’s arrangements as “a gimmick”. Senators were so infuriated by the arrangements that they accused Apple of exploiting the gap between the two nations’ tax laws and creating a “byzantine tax structure” that was inexcusable. One of the report’s authors, the Democratic senator Carl Levin, said Apple had “created offshore entities holding tens of billions of dollars while claiming to be tax resident nowhere”. The Republican senator John McCain said “Apple claims to be the largest US corporate taxpayer, but by sheer size and scale it is also among America’s largest tax avoiders … It should not be shifting its profits overseas to avoid the payment of US tax, purposefully depriving the American people of revenue.” Senator John McCain. Photograph Aaron P BernsteinReuters In the months that followed the publication of the report, and with the European commission also starting to scrutinise Apple’s tax arrangements, Ireland came under pressure to change its tax rules and new proposals were announced in October 2013. The Ir…



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