Italy Investigates Apple For Alleged Tax Fraud 175
Frankie70 writes in with some more bad news for Apple in Europe. "U.S. tech giant Apple is under investigation in Italy for allegedly hiding 1 billion euros ($1.34 billion) from the local tax authority, two judicial sources with direct knowledge of the matter told Reuters. Milan prosecutors say Apple failed to declare to Italian tax authorities 206 million euros in 2010 and 853 million euros in 2011, one of the sources said, confirming a report by Italian magazine L'Espresso. The Italian subsidiary of Apple booked some of its profit through Irish-based subsidiary Apple Sales International (ASI), thus lowering its taxable income in Italy, the source said."
Re:It sounds like the issue is where sales are mad (Score:4, Informative)
there's no issue about where the sales are made actually in this.
what they have done is artificially move the on-paper profits to the ireland based entity - which is owned by the same people. sales are done in italy, but they're claiming that they make no profit from the sales in italy because they (on paper only, mind you, it's not like they're actually ferrying the shit through ireland) buy the devices at retail price from the another entity in the business which is based in ireland.
why is it important to squash this practice eventually? well doh, there wouldn't be any taxes to be paid on any corporate profits stemming from sales anywhere else than ireland in europe if they don't do something about it(the alternative is in practicality to raise VAT so that all corporate profits taxing comes from VAT... which might not be that bad of an idea, alternatively force ireland to change it's laws to stop acting as a tax haven stopgap for this purpose)..
"ASI contracts with mainly Chinese companies to manufacture iPads and iPhones. ASI then sells these products to another Irish company which resells them to retail subsidiaries in Italy and other European countries.
The pricing of the inter-company transactions ensures that the lion's share of the profit ends up with ASI, the Senate report said. Low profits in countries like Italy mean low tax payments there."