Apple involved in $74bn tax evasion schemeOther
The clamour surrounding Apple’s tax affairs in Washington on Monday is set to reverberate around the world in the coming days, following revelations that taxpayers abroad have suffered more than those in the US from the company’s tax avoidance tactics.
In one unusual arrangement, Apple cut a deal to pay a corporation tax rate of 2 per cent or less in Ireland over the past decade, far below the usual 12 per cent rate. It then passed billions of dollars of earnings through subsidiaries in the country, enabling it to escape large tax payments to other countries around the world.
All of Apple’s sales outside the Americas are channelled through the country, according to Monday’s revelations, which were contained in a report from the Senate’s permanent subcommittee on investigations.
The implications were not lost on politicians in Washington, even though the Senate’s investigation was prompted by purely domestic concerns about a massive leakage of US tax that would otherwise have been paid by some of the country’s richest multinationals.
Apple was also accused of shifting profits out of the US by booking part of its research and development costs through a company in Ireland, even though, by its own admission, “virtually all” of its R&D takes place in the US. That enabled it to also book revenues in Ireland, cutting tax on about $10bn a year in profits that otherwise would have fallen due in the US.
Apple also defended its recent decision to fund a large share buy-back plan by issuing $17bn in debt rather than repatriating part of its $102bn in foreign cash reserves, which would have led to a tax charge of up to 35 per cent.