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Apple's 'Complex Web' Helped It Avoid Taxes, Panel Finds
"Apple wasn't satisfied with shifting its profits to a low-tax offshore tax haven," said Sen. Carl Levin, D-Mich., who chairs the panel. "Apple sought the Holy Grail of tax avoidance. It has created offshore entities holding tens of billions of dollars, while claiming to be tax resident nowhere."
This is what you get from a company that chooses to "think different."
Official residence in one political entity (for the Apple subsidiary, that's Ireland), doing business in a second (the US), and not paying tax in either. Isn't that what people do all the time with their internet purchases - live in one state and purchase goods in another?
So what else is there? The issuing of bonds to avoid repatriation. Not that novel, either. That's similar to what people do to get income out of whole life policies without paying taxes. They borrow against the appreciated value (rather than "repatriating" the income by withdrawing it). When they die, the remaining value in the policy passes tax-free to their beneficiaries. The question for Apple is what happens when interest rates go back up (I don't think Apple is planning on dying)?
Whether on the corporate or personal level, these are all shell games.
What Apple needs to do is hire a bunch of lobbyists to grease the palms and line the back pockets of politicians like the drug, utility, healthcare, agriculture and oil companies do and the investigation (?) will be over with. Instead, like always, they choose to play their own game(s).
Who should be blamed here Apple or Congress that writes the tax law? Apple, apparently followed the tax code. In this case, it worked to their advantage.
Perhaps. a corprate flat tax might be an answer to the complex tax laws that now exists. But, getting something like this installed will be most difficult as many most likley will lobby against such.
Reply to @Skeeter: Actually the issue is that the subsidiary, Apple Operations International, is not a legal entity under US law and unless subsidiary remits the monies back to Apple Inc., the US corp there is no taxable income to pay taxes.
Such shell companies exist because Ireland decided that even though they are legal entities in Ireland if they do not do much local business they do not have to pay much of the tax that regular Irish corporations pay. Thus, the end result is that we now have multi-nationals that pay tax to almost no country tax jurisdiction.
Ireland created incentive for corporations in all over the world to have such shell entities over there. This is a problem that is not likely to be solved unless international community decide to regularized tax laws. EU, UK etc. is looking into this matter as well.
I kissed an Irish, young lady in Ireland once upon a time. Do I get any points for this? I didn't game anything at the time; as I was a proper American gentleman.
Comments
Official residence in one political entity (for the Apple subsidiary, that's Ireland), doing business in a second (the US), and not paying tax in either. Isn't that what people do all the time with their internet purchases - live in one state and purchase goods in another?
So what else is there? The issuing of bonds to avoid repatriation. Not that novel, either. That's similar to what people do to get income out of whole life policies without paying taxes. They borrow against the appreciated value (rather than "repatriating" the income by withdrawing it). When they die, the remaining value in the policy passes tax-free to their beneficiaries. The question for Apple is what happens when interest rates go back up (I don't think Apple is planning on dying)?
Whether on the corporate or personal level, these are all shell games.
Who should be blamed here Apple or Congress that writes the tax law? Apple, apparently followed the tax code. In this case, it worked to their advantage.
Perhaps. a corprate flat tax might be an answer to the complex tax laws that now exists. But, getting something like this installed will be most difficult as many most likley will lobby against such.
Moving on with my day.
Skeeter
http://finance.yahoo.com/blogs/daily-ticker/apple-corporate-income-tax-bill-killed-pulitzer-prize-125744062.html?vp=1
The article contains embedded links to related articles.
Such shell companies exist because Ireland decided that even though they are legal entities in Ireland if they do not do much local business they do not have to pay much of the tax that regular Irish corporations pay. Thus, the end result is that we now have multi-nationals that pay tax to almost no country tax jurisdiction.
Ireland created incentive for corporations in all over the world to have such shell entities over there. This is a problem that is not likely to be solved unless international community decide to regularized tax laws. EU, UK etc. is looking into this matter as well.
I kissed an Irish, young lady in Ireland once upon a time. Do I get any points for this? I didn't game anything at the time; as I was a proper American gentleman.
http://www.ritholtz.com/blog/2013/05/apples-international-tax-structure/