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Web of Tax Shelters Saved Apple Billions, Inquiry Finds 716

Posted by Unknown Lamer
from the where-else-would-you-put-it dept.
mspohr writes with news that Apple might be in a bit of hot water over its policy of offshoring revenues to favorable tax jurisdictions. Only they take it a step further, from the article: "Apple relied on a 'complex web of offshore entities' and U.S. tax loopholes to avoid paying billions of dollars in U.S. taxes on $44 billion in offshore income over the past four years ... The maker of iPhones and iPads used at least three foreign subsidiaries that it claims are not 'tax resident in any nation' to help it avoid paying billions in 'otherwise taxable offshore income,' the Senate Permanent Subcommittee on Investigations said in a statement yesterday."
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Web of Tax Shelters Saved Apple Billions, Inquiry Finds

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  • Apple’s side: (Score:5, Informative)

    by Udo Schmitz (738216) on Tuesday May 21, 2013 @08:32AM (#43780287) Journal

    Why not link to their answer as well?

    http://images.apple.com/pr/pdf/Apple_Testimony_to_PSI.pdf [apple.com]

    “Apple does not move its intellectual property into offshore tax havens and use it to sell products back into the US in order to avoid US tax; it does not use revolving loans from foreign subsidiaries to fund its domestic operations; it does not hold money on a Caribbean island; and it does not have a bank account in the Cayman Islands. Apple has substantial foreign cash because it sells the majority of its products outside the US. International operations accounted for 61% of Apple’s revenue last year and two-thirds of its revenue last quarter. These foreign earnings are taxed in the jurisdiction where they are earned (“foreign, post-tax income”).”

  • by guidryp (702488) on Tuesday May 21, 2013 @08:40AM (#43780369)

    All the foreign "loopholes" actually only help Apple avoid paying foreign taxes, those aren't about US taxes at all. These seem more about adding to the political theater of the government going after tax dodgers.

    The entirety of Apples foreign cash horde earned on foreign sales, is subject to US taxation. Not one of those foreign shell games protects those earnings from US taxation. In fact they make the cash horde larger, making it potentially sweeter for US taxation.

    But here is the one "loophole" that really counts. US Taxation doesn't come into effect until Apple repatriates the cash, which there is no requirement that Apple (or any other US corporation) ever actually do.

    This is why US corporations have 1.45 Trillion dollars parked outside the USA.
    http://www.forbes.com/sites/afontevecchia/2013/03/19/u-s-companies-stashing-more-cash-abroad-as-stock-piles-hit-record-1-45t/ [forbes.com]

  • Re:Apple’s side: (Score:4, Informative)

    by Dunbal (464142) * on Tuesday May 21, 2013 @08:56AM (#43780509)

    From TFA: " It has created offshore entities holding tens of billions of dollars, while claiming to be tax resident nowhere."

    Everything you quoted fails to account for the above, from TFA. If it's true, then Apple is evading tax and breaking the law. Everyone (person or corporation) is resident somewhere.

  • by ebno-10db (1459097) on Tuesday May 21, 2013 @09:40AM (#43780905)

    Whilst Apple Inc may be a US company it has subsidiary companies in the other countries/regions that it operates. Apple's earnings place 2/3rds of its income outside the US. Why should that income be subject to US tax when tax has already been paid in the region it was earned?

    RTFA (NYT):

    Congressional investigators found that some of Apple’s subsidiaries had no employees and were largely run by top officials from the company’s headquarters in Cupertino, Calif. But by officially locating them in places like Ireland, Apple was able to, in effect, make them stateless — exempt from taxes, record-keeping laws and the need for the subsidiaries to even file tax returns anywhere in the world.

  • by ebno-10db (1459097) on Tuesday May 21, 2013 @11:02AM (#43781905)

    Actually Steve Jobs and Eric Schmidt lobbied for a one-time tax holiday so they could repatriate their income earned overseas without losing a large portion of it in taxes.

    We had a one-time tax holiday like that not too many years ago. What they lobbied for was a second "one-time" tax holiday. The promised US investment from the first one never materialized, so even congress didn't get dupped (or bought) for a second one.

  • by whitroth (9367) <whitroth@5MOSCOW-cent.us minus city> on Tuesday May 21, 2013 @12:55PM (#43783395) Homepage

    You're an ignorant idiot.

    Fact (check it on the IRS website, irs.gov): in 1972, 24% of the US federal revenue stream was from corporate taxes, and 16.67% from individual income taxes. Right now, it's barely above 10% for corporate taxes, and 44+% for individual income taxes.

    Meaning you, personally, are paying taxes *instead* of Apple. How much of the year are you working to pay those?

                      mark

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