Apple execs swearing on tax reform hearing

More than $1 trillion leaked from the tax coffers of EU member states each year, an amount large enough to prompt European leaders Wednesday to hold a summit on reforming corporate taxes. The move follows high-profile investigations showing Apple and other tech giants used European countries to avoid paying taxes in their home countries.

Earlier this week, Apple CEO Tim Cook testified before a Senate subcommittee investigating how the iPhone maker used a hole in Ireland’s tax laws to lower its U.S. tax burden on $74 billion held overseas…

In a draft of the summit’s goals to be agreed to by the European leaders, the EU gathering will seek ways “for strengthening tax policy and coordination, including fighting tax avoidance schemes and the process of routing profits abroad,” according to Reuters.

However, while the summit asks for collaboration among EU members and sharing of tax information, it appears action will be left to individual countries.

In the U.S., Cook defended Apple’s use of tactics to trim the company’s tax bill.

In one instance, Apple was able to pay just a two percent tax rate on its overseas income by using the Irish loophole.

Apple’s avoidance of taxes was highlighted earlier this month when the company decided to borrow money for a $60 billion stock buyback, rather than tap its overseas horde of cash. The decision to borrow saved Apple from paying U.S. taxes on the money held overseas.

Apple Operations International (exterior, Reuters 001)
Apple Operations International, a subsidiary of Apple Inc in Hollyhill, Cork, in the south of Ireland. Photo: Stringer/Ireland/Reuters

Apple is funneling the money through a few subsidiaries overseas, including Apple Operations International in Ireland which has no employees and no physical address because its assets are managed by employees at Apple’s Braeburn Capital subsidiary in Nevada.

The Irish subsidiary had not submitted a tax return anywhere for five years. Apple is not alone in questions of using the EU tax code to save money.

The EU summit is expected also to focus on Google, as well as Amazon. Google’s Paris office was raided in 2011 during a French investigation that eventually led to a request by the government that the company pay 1.7 billion euros in back taxes.

The iPhone maker also drew the attention of investigators in the UK, who asked whether the firm was avoiding British taxes. Both Google and Apple officials say their companies abide by the tax laws of nations in which they work.

If all of this sounds too complicated, keep in mind that these big corporations do not appear to break any law as these tax avoidance tricks are perfectly legal even if they come across as unethical.

  • Gorgonphone

    i.e. ,more politicians want some bribe money

  • DocBud

    “If all of this sounds too complicated, keep in mind that these big
    corporations do not appear to break any law as these tax avoidance
    tricks are perfectly legal even if they come across as unethical.”

    This notion that companies or individuals are morally obliged to pay some “fair amount” of tax is a joke. A company or individual is required to pay only the minimum amount of tax that the law requires and that is the right amount of tax. If companies pay more than is due it is paid for either by the customers in increased prices, the workers in terms of lower wages or the shareholders receiving lower dividends. The implied suggestion that companies should choose to organise their tax affairs in a way that is not the most efficient (and therefore supposedly more ethical) is ridiculous. The right amount of tax should be set by laws passed by parliaments not by the mob baying for everyone to pay what they believe to be “fair”.

    • And companies should abide by those laws instead of juggling holdings in order to take advantage of a loophole that wasn’t intended to be applied as companies do when they are looking to cheat on their taxes.
      And further, why shouldn’t we expect companies to have ethics?! They want to be treated as people and we expect citizens to behave ethically…

  • It was the 2% that got my attention. When I’m lucky enough to get a paycheck over 20% comes off the top… Then there are the taxes on whatever I purchase, effectively sucking up nearly a third of my pathetic income and a multi-billion dollar company (trillion yet?) throws in a measly 2 f**king %!!
    I’m typically not an “eat the rich” type but if things continue as they are at the moment it won’t be long before starvation turns me ravenous enough to cannibalize a fat cat or two… I hope I have the stomach to eat them alive to maximize suffering.