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 is time to stop criminals. (Score:5, Insightful)
Criminal means convicted under the law - so it's precisely lobbying and other corruption which stops this behaviour being criminal.
There is no solution except a tempering of capitalism. If you allow businesses to become too powerful, they will take over governments. They have taken over governments.
Re:Corporations dodge tax. (Score:1, Insightful)
Clearly you haven't been paying attention to the Italian government for the last half-century.
The problem will not be that Google has not been paying tax - the problem will be that Google hasn't been greasing the right palms.
Re: Predictable (Score:5, Insightful)
Your tax is so high because these people don't pay any. 1 billion divided by 30 million taxpayers in Italy is 30 bucks each.
Re:Predictable (Score:5, Insightful)
it remains to be said that the taxation system worldwide is completely out of control.
That depends massively on your point of view. Overall tax burdens in Scandinavian countries are reckoned to be among the worlds highest yet they also rank very highly for things like happiness, quality of life and medical care, things which are often moderated by tax-funded government schemes and departments. "Out of control" depends on what you think the taxation system should be achieving.
Bottom line is that it doesn't matter whether or not you like the tax system: if you operate in a country then you operate under their tax laws.
Re: Predictable (Score:3, Insightful)
Trouble is that argument implies there is some magic number that equals Enough for the taxing authority, and there isn't. Or it's enough for that year, then it must be raised again. And again. And Again... Entities not paying tax are not the cause of ever increasing rates.
If they're based in Ireland, why are they in Italy (Score:5, Insightful)
They do business in Italy. They get money in Italy. They pay Apple (Eire) an extremely uncomptetitive rate for the "rights" to use their own frigging products in Italy so that they make no profit off massive revenue.
It's absolutely no different from Hollywood Accounting.
And it IS tax evasion.
If a private corporation cannot make 3% ROI, then it's a failure. Since so many multinationals manage to wrange a way to a NEGATIVE return on investment, then how the hell is this fatuous meme "The private industry can be profitable, the government can only run things into the ground" created?
Because they're avoiding taxes by tricks.
They have two options
1) they are incompetent, in which case they should be closed down by shareholders for incompetent management and all C*O pay should be slashed because so few manage to make any profit for the company.
2) they are illegally evading taxes but are otherwise actually competent at business
There is such a value. (Score:2, Insightful)
Paying for the stuff being done is a "magic number that equals Enough for the taxing authority".
Morover, when the subject is executive compensation, you're all about how it's allowed that they can just be given as much as they can get away with because "you can't put a limit on what someone earns".
Yet when it comes to government, somehow, there's a magic number that they cannot spend above and must be limited.
Hell of a double standard you've got there.
Re:If they're based in Ireland, why are they in It (Score:5, Insightful)
Technically it's tax avoidance, which is immoral but not illegal.
Re:If they're based in Ireland, why are they in It (Score:5, Insightful)
They do business in Ireland and they sell to customers in Italy. The whole point of the EU is it's a single market, that means, you can establish your company once and sell to everyone within that market. If you set up in Ireland and sell to Italians, not only is that not tax evasion, that is the point of the EU in the first place!
These companies have all had exactly the same tax arrangements for years and as Apple point's out in the article, have been repeatedly audited and passed. In fact Italy appears to have audited Apple three years in a row, which seems only explainable as harassment - tax audits are supposed to be semi-random spot checks to ensure compliance. If you pass an audit, getting audited the next year is just a waste of time and money for all concerned.
What's happening now is that a lot of governments around the world, having spent many decades promoting trade and economic integration when times were good and they had excessively cheap credit, now decided that maybe free trade isn't such a hot idea after all. After all, it might mean that other countries who you trade with end up more appealing to do business in. Ireland has had a long-standing policy of aggressively attracting international businesses with low tax rates, it's a very popular policy amongst the people in Ireland, and in fact until their government foolishly panicked and committed to a full bailout of their banks their economy was doing great. If the Italians are now mad about it, they have two choices:
1) Start rolling back the EU single market, then they can pass rules that say "if you want to sell stuff to Italians, you must run your business out of Italy and pay whatever taxes we want to do that" (of course this means some companies won't bother)
2) Deal with it and find other sources of revenue, whilst enjoying the fact that when Italian companies sell to the Irish, the Italians get to keep the corporate tax from that.
Right now governments are trying to do both simultaneously, which is why they grind to a halt in an internal deadlock of contradictions and you get bizarre setups like companies buying things from themselves.
Apple specifically will "solve itself" after a while because probably, Ireland will start making them corporation tax in Ireland safe in the knowledge that it's still more appealing than the alternatives. However this will not satisfy other members of the EU who dislike tax competition.
By the way, your post is very emotional. Tax should not be an emotional topic. Tax is (or rather should be) a technical matter in which people analyze the most efficient ways to raise the revenues governments need to function. Whether corporation tax is even a good idea at all is a matter of some debate in academic circles - the fact that you're trying to tax an entity that doesn't actually have any specific physical location is one reason why everyone ends up feeling like it's "not fair".