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Australia Businesses The Almighty Buck Apple Politics

How Ireland Got Apple's $9 Billion Australian Profit 288

Posted by samzenpus
from the letter-of-the-law dept.
elphie007 writes "An investigation by The Australian Financial Review has discovered how from 2002 to 2013, Apple has shifted approximately $AU8.9 billion of revenue generated in Australia to Ireland, via Singapore. The article states that last year alone, Apple Australia paid only $AU88.5 million in tax, or 0.044% of estimated potential tax liabilities. What's more, the Australian Tax Office has agreed that this arrangement is acceptable under Australian law."
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How Ireland Got Apple's $9 Billion Australian Profit

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  • by hcs_$reboot (1536101) on Thursday March 06, 2014 @09:07AM (#46417965)
    Apple probably used Apple Maps to locate the tax office.
  • by serviscope_minor (664417) on Thursday March 06, 2014 @09:11AM (#46417993) Journal

    Remember moral != Legal, so just because they were able to cheat, doesn't mean they should. Also, they were under no legal or moral obligation to play silly buggers in order to cheat the Austrailians out of tax.

    and yes it's cheating because they get to use all of the resources that Aus provides to allow business to make money the pay for almost none of it. That makes them little more than freeloading scum.

    • by gbjbaanb (229885) on Thursday March 06, 2014 @09:21AM (#46418045)

      the answer is simply to change the law, stop any tax-sharing agreements with foreign governments that allow super-low rates of tax, or refuse to recognise any "head office" that is little more than a postbox.

      I mean, if the government (not just Aus) said "We agree with tax sharing but the tax rate here is 20% (or whatever) then we will recognise the tax paid by Apple Investment Holdings (Bermuda) Ltd at 1%, but we still charge the remaining 19% to the company's revenues made here".

      The head office thing can be dealt with just like the EU 1995 directive that was applied to banks after the collapse of the BCCI bank - their HQ has to be in the same place as their registered office. (this is not so they can avoid tax, more that they can be effectively regulated, but I guess it wouldn't hurt WRT tax).

    • by SJHillman (1966756) on Thursday March 06, 2014 @09:23AM (#46418061)

      It's not cheating if the ones making the rules (The Aussie government) says it's perfectly legal.

      • by causality (777677) on Thursday March 06, 2014 @09:35AM (#46418131)

        It's not cheating if the ones making the rules (The Aussie government) says it's perfectly legal.

        It makes me wonder exactly when and how those rules got onto the law books, how they were sponsored, and what relationship the supporting politicians had with the major corporations of that time.

        There are lots of ways to cheat that are legally legitimate.

        • The laws are reasonable - they allow costs to be offset when calculating profits.

          The problem occurs because
          A can sell to B at cost who can sell to C at the price that C finally sells for and the only person making any profit is B.

          Perhaps the market is very competitive, A cannot sell above cost. C cannot buy at below the price B will sell at. (obviously in the real world A and C would need to make some profit but it's not inconceivable that A and C are working with margins of less that 5% while B is working

          • by thaylin (555395)
            except in practice they are going beyond the offsetting costs when calculating profits. An Irish shell company has no costs, its subsidiary has no real cost to license the products, other than an arbitrary number made up for the purpose of making the shell game legitimate. Make it so the costs paid to parent companies, or companies owned by a parent company are not considered costs.
    • by Alomex (148003) on Thursday March 06, 2014 @09:29AM (#46418105) Homepage

      That makes them little more than freeloading scum.

      You are correct. So did MItt Romney when he took advantage of a loophole in the law to move over $100 megabucks to a tax shelter in the Bahamas.

      This is all perfectly legal, just like tax breaks and welfare is perfectly legal for people who are poor.

      Which of these two did he choose to highlight as immoral? The poor person of course, not Apple's or his own immoral behavior.

    • by AmiMoJo (196126) *

      It's worse because they claim to be a moral organization. Investors were told that environmental considerations come before profit, for example. Just not social considerations, apparently.

      • Hmmnm – that is a interesting idea. Since environmental protection is the most important thing why stop with the shareholder’s profits? Raid the worker’s pension funds and skip paying taxes. Or maybe just shut down production? Of course this leaves the question as what is important – CO2 reduction, water quality, processing of hazardous waste. Can I dump a lot of hazadus waste into the local river if it drops my CO2 footprint to zero?

        Or, here is a different idea – we as a socie

    • so just because they were able to cheat

      By definition what they are doing is not "cheating" if the tax department says it is legal.

      As much as you and people like you want to paint Apple with the Evil brush, what Apple is doing is sound AND ethical . There's nothing wrong with shifting profits around in the way Apple is doing it, not legally OR morally.

    • by guruevi (827432)

      I think legal = moral, heck I do things that I believe are moral that may be considered illegal in some parts of the world. If you've ever downloaded music or movies, if you've even linked to a site you did not own copyrights to, you may have done something illegal regardless of how much people it helped. If you're gay, if you have sex without being married, if you smoke pot, if you drink alcohol, all those things are immoral or illegal in some communities.

      Your definition of morality should not imply that I

    • so just because they were able to cheat, doesn't mean they should.

      So, how did they "cheat", exactly? By not paying any more tax than they were legally liable for?

      Also, they were under no legal or moral obligation to play silly buggers in order to cheat the Austrailians out of tax.

      Nor were they under any legal or moral obligation to pay extra taxes to Australia.

      It always amazes me that so many people seem to think that anyone (corporation or individual) should pay more taxes than they're legally obligated

  • by tcopeland (32225) <tom&thomasleecopeland,com> on Thursday March 06, 2014 @09:22AM (#46418057) Homepage

    If you got $500 from writing a tech article, would you rather pay $200 of it in taxes or $2?

    Also, doesn't Apple have a duty to shareholders to cough up as little in taxes as legally possible?

    • I'd rather claim a loss on writing the article and get a $200 refund on top of keeping my $500. But sadly, I don't live in Hollywood so I can't do that.

      • by guruevi (827432)

        Some creative accounting never hurt anyone. Pay yourself a salary of $700/article and then claim a loss.

    • by O('_')O_Bush (1162487) on Thursday March 06, 2014 @09:49AM (#46418211)
      No, no more than they have a duty to do anything else immoral ( like slave labor in China or dumping waste in some poor country with few environmental regulations ) to boost profits. Their duty to shareholders comes after acting ethically.

      And it is unethical. If only those wealthy enough to set up shell corporations and make imaginary tax evasion schemes can participate in evading taxes, but those that can't are forced in the burden of taxation, despite the expectation of the law to be that every company or entity be taxed.

      If you accept that there is a duty for all to be subject to the same tax law, which I think we all do (regardless your perspective of tax evasion), then abusing a loophole to keep from paying taxes violates Kant's FUL, and is therefore also logically unethical if you follow Kantian ethics. For Utilitarians, I am sure you could make the argument that the tax evaded dollars serve the evaders far less than the good taxation does for Australia, but I don't follow that regime.
      • by Alomex (148003)

        Actually several legal systems disallow loopholes. That is, when the intent of the law is clear and any normal person could see that the loophole was a missing case in what was meant to be an exhaustive list, then the loophole doesn't apply.

        On the other hand one can have a "to the letter" legal system which results in bills 5,000 pages long that still can be abused by anyone employing a sufficiently resourceful lawyer. This seems to be the preferred choice in the USA and several other countries but it doesn

      • Their duty to shareholders comes after acting ethically.

        I agree in principle but the problem with that argument is that it is easy to disagree about what is ethical. Many people see no ethical problem whatsoever with polluting or discrimination or tax avoidance or all sorts of other damaging/problematic behavior. Hell, a lot of people think it is downright heroic to stick it to the tax man. The usual argument for allowing pollution is that it is more ethical to allow pollution than to lose jobs. It might be a poor argument but many people honestly believe th

    • Also, doesn't Apple have a duty to shareholders to cough up as little in taxes as legally possible?

      You should trying asking that to Tim Cook at a shareholders meeting and see what kind of response you get. Last time he was described as "visibly angry".

      • You should trying asking that to Tim Cook at a shareholders meeting and see what kind of response you get. Last time he was described as "visibly angry".

        Whatever. This is the same guy that bluntly told congress they were wrong [businessweek.com] to try to collect more tax from Apple. He talks about social responsibility but he only means it if someone else has to pay for it.

        • He talks about social responsibility but he only means it if someone else has to pay for it.

          No, Apple pays plenty (far more than any other company) for monitoring and reports on suppliers, for bonus to overseas workers that only Apple gives, for higher labor costs because they will not allow workers to be over-worked.

          What does not make any sense is to pour MORE money into a giant engine of inefficiency that just wastes it. Why would anyone but a handful of government workers be better off if Apple paid mor

          • No, Apple pays plenty (far more than any other company) for monitoring and reports on suppliers, for bonus to overseas workers that only Apple gives, for higher labor costs because they will not allow workers to be over-worked.

            "Far more"? Demonstrable nonsense. There are plenty of companies that actually have their own facilities in China (and elsewhere) and I assure you that doing that costs FAR more than what Apple pays to "inspect" their suppliers. I've been to China and visited plants for companies like Emerson Electric which has over 10 plants in China. Apple sending over a few inspectors and "demanding" that they not overwork their workers (which BTW they still do) is hardly what I consider socially responsible. And Ap

    • Companies are essentially amoral (not the same as immoral!); it's a bit naive to claim that Apple has a moral obligation to pay taxes if they have a legal way to avoid it. You could even argue that they have a duty to their stakeholders (stockholders, employees and customers) to minimize the tax they pay, so they can increase share value, are able to pay higher wages (ha ha...), and lower prices.

      The way to fix this is legislation, not a moral appeal. The problem I have with the current tax situation is
      • it's a bit naive to claim that Apple has a moral obligation to pay taxes if they have a legal way to avoid it.

        It's not naive at all. They can have both a (perceived) moral obligation to pay and a legal way to avoid paying. The one does not preclude the other. The ability to do something about it is a separate issue. The question is whether their duty to society trumps their duty to their shareholders.

        The way to fix this is legislation, not a moral appeal.

        Bingo. Exactly correct. And the fact that such legislation has not been passed says everything you need to know about our elected officials and their priorities.

    • Government has a duty and responsibility to ensure that they are paying more like $40-$60.

      Frankly, force corporations to be taxed on a W2. Hey, Citizens United, corporations are people, right? So use the same W2. And those corporations will in fact pay 1000x in taxes than what they currently pay.

  • Australia, Ireland, Singapore etc are supposedly allies of the USA. Two bit countries like Cayman Islands and Lichtenstein help MNCs to shift money around, allow corrupt despots of third world countries to launder their ill gotten money through corruption. They also let MNCs to dodge taxes. Countries like Pakistan and Saudi Arabia are our allies in war against terror.

    How long can this go on? Every one from the rich 0.1% of Americans, MNCs, two bit countries, supposed allies are all taking pot shots at Ame

    • Australia is the one getting fucked here ... Australia has a trade surplus AND a current account deficit, they're a colony not a country.

      At least the USA gets shit for free, you've been running a trade deficit for 4 decades.

  • If I were a dual citizen [Ireland/USA] could I shift all my income earned in the US to my Irish self and pay no taxes? After all, my Irish self needs lots of whiskey money.
    • Re: (Score:2, Insightful)

      by Anonymous Coward

      Actually, the U.S. is one of the few countries who claim the right to tax income of its citizens, no matter in what country it was earned [americansabroad.org].

      • The US also claims the right to prosecute its citizens for crimes committed in other countries... even if it wasn't a crime in the country it was committed.

  • by bayankaran (446245) on Thursday March 06, 2014 @09:57AM (#46418283) Homepage
    What's the gain for Ireland?
    I am sure they don't see much of the offloaded offshore profits.
    So what does Ireland gain - other than may be few employees manning a registered office and may be a miniscule percent of the funds?
    Is it a case of something is better than nothing?
    • by slapout (93640)

      Free iPhones for life?

    • Re: (Score:3, Informative)

      by rhazz (2853871)
      Ireland has corporate taxes, they are just MUCH lower than most other developed countries. So Ireland gains by taxing these corporations. It is extremely lucrative for Ireland because they get billions in tax dollars from the shell company that only has a few employees. The social cost to Ireland is nil compared to the tax revenue, but quite the opposite for Australia.
      • Apple employees over 4,000 employees in Ireland. The large companies with bases here are also here for our educational talent, as well as the taxes. The taxes bring them here and the employees keep them here. That was the whole idea behind introducing the low taxes (they are around 10%) in the 80s. Its the reason we are not a bunch of peasant farmers any more. We are very much a knowledge economy these days.
    • > What's the gain for Ireland?

      Seems like they get to host $9B. Now consider the mechanics of fractional reserve banking.....

    • by timeOday (582209)
      Exactly, Ireland did not "get" 9 billion as the headline claims. The number of extra jobs created by this in Ireland is a handful at most.

      The only prize in the race to the bottom is just a smidgen of grease and crumbs, like when the peanut butter is empty.

      • by geekoid (135745)

        yes they did. The banks in Ireland can now use this money to make more money by lending it out.

      • Yes, absolutely, Ireland did not get 9 billion. Corporate tax revenue is more like 4 billion per year. This is creating more than a handful of jobs though. 4000 jobs from apple, 500 jobs from facebook, 2000 jobs from google, 1000 jobs from amazon, etc. Those are the ones I know off the top of my head and they are all growing.
  • by MadCow42 (243108) on Thursday March 06, 2014 @10:19AM (#46418455) Homepage

    Apple - nor any corporation - is not a charity. It's not their job to pay more taxes than they legally have to. Their job is specifically the opposite - generate as much value for shareholders as they can.

    Any company that pays more than they have to by law should be questioned, or the shareholders should revolt. Actually... I can't think of any example of one that does, intentionally at least.

    So - the issue is NOT with Apple - TFS even says that the Australian tax office agrees this is all above board - but the issue is with their tax system. It's structured to allow that, intentionally or not. There are all kinds of tax incentives in the world, and they're all there to encourage the right mix of business development and growth that the region needs. Essentially, tax is used as an incentive to offset the disadvantages that would otherwise naturally be there (labor cost, non-ideal locations, skill levels, etc.).

    Don't be mad at Apple... EVERY company does this. Haters be hat'n, I guess. :)

    • This whole idea of paying taxes on "profits" is silly. If governments wanted to get taxes, they'd switch to gross receipts tax. Of course, their corporate masters won't let them, but that's a whole different problem.

    • What we're saying is that the LAWS need to be re-written so that they can no longer legally pay such a low amount of taxes. And we are sharing this as an example of how extremely poor the laws are, and what a crappy job our government is doing in it's role.

      And in Apple's case, they're in very gray territory. Creating a subsidiary company, and then charging it from another subsidiary company and insane license agreement. If it can be successfully argued that those charges are unrealistic (ie: no other compan

    • Don't be mad at Apple... EVERY company does this.

      Don't be mad at the Steubenville rapists... EVERY rapist does this.

    • by dwpro (520418)

      When you say something as generic as "generating value" then paying sufficient taxes could be considered an investment in the solvency of your target market. Any number of rationalizations could be made in either direction. You are correct though that the problem is not with Apple though, it's the citizens fault for not requiring a modicum of fairness in the tax code or at the very least shaming and boycotting corporations who are leeching.

      Your "hater" phrasing does actually piss me off. Would you say th

  • Totally missing on those $-addicts.
    Seems to come with their genetics.
    Not even sure if the word "patriotism" is the right term here. Maybe patriotism is including to cheat in taxes.
    Nevertheless, people hate the taxman because they distrust the receivers - government.
    So, it's an ingrained fad to reduce tax payments as much as possible.
    Stash it away in Grand Cayman, Switzerland and hope you don't get caught. That's the smaller guys.
    The larger whales in this game are doing it legally by feeding part of their st

  • Why the FUUUUUUCK does audio randomly start playing on ads on /. who is the fucking imbecile that thought it would be a good idea to annoy the FUCK out of people. Fuck you moron, Fuck you moron, FUCK YOU MORON! Yes i'm mad bro.
    • by geekoid (135745)

      Someone got caught goofing off on slashdot when they where suppose to be working...

  • but that doesn't mean they aren't a bad actor.

    Hopefully AU will change their regulatory law to stop this sort of greedy crap.
    The US as well..also, well, everywhere else.

  • That would put its potential tax liability at $201B. 4.4% seems more likely.

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