Apple in trouble on tax evasion
Using an unusual global tax structure, Apple Inc has kept billions of dollars in profits in Irish subsidiaries to pay little or no taxes to any government, a US Senate report on the company’s offshore tax structure said on Monday.business Updated: May 22, 2013 00:17 IST
Using an unusual global tax structure, Apple Inc has kept billions of dollars in profits in Irish subsidiaries to pay little or no taxes to any government, a US Senate report on the company’s offshore tax structure said on Monday.
In a 40-page memorandum released a day before Apple CEO Tim Cook is scheduled to testify before Congress, the Senate’s Permanent Subcommittee on Investigations identified three subsidiaries that have no “tax residency” in Ireland, where they are incorporated, or in the United States, where company executives manage those companies.
The main subsidiary, a holding company that includes Apple’s retail stores throughout Europe, has not paid any corporate income tax in the last five years.
The subsidiary, which has a Cork, Ireland, mailing address, received $29.9 billion in dividends from lower-tiered offshore Apple affiliates from 2009 to 2012, comprising 30% of Apple’s total worldwide net profits, the report said.
“Apple has exploited a difference between Irish and US tax residency rules,” the report said.
Apple said in a comment posted online on Monday it does not use “tax gimmicks.” It said the existence of its subsidiary “Apple Operations International” in Ireland does not reduce Apple’s US tax liability and the company will pay more than $7 billion in US taxes in fiscal 2013.
Ireland says not to blame
Ireland said on Tuesday it was not to blame for Apple Inc’s low global tax payments. The Irish government, which has seen the luring of US 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.
Apple’s paid just 1.9% tax on its $37 billion in overseas profits in 2012.
First Published: May 21, 2013 23:28 IST