Süddeutsche Zeitung, the biggest newspaper in Germany, on Wednesday published an open letter to Apple’s boss Tim Cook in which its editor-in-chief Wolfgang Krach claims that the Cupertino giant pays between 1 and 7% tax on its overseas income.
Krach came up with the figure after analyzing documents in the Paradise Papers leak. He said Apple has left questions posed by the paper unanswered, accusing the iPhone maker of tight-lipped platitudes when it comes to articulating its controversial tax practices.
“Apple bills itself as a transparent company. If this is true, then there really isn’t any reason to stay silent, is there?,” reads the report.
He slammed Apple for seeking official assurance of tax exemption from an unspecified country.
Why do you want that? Why do you feel entitled to not pay any taxes in a country? Did you want to make zero-tax status a precondition for establishing tax residency there? What gives you the right to do so?
Apple is the largest taxpayer in the world.
The Cupertino company has said that its effective tax rate on foreign earnings is 21% while denying recent reports that it moved untaxed offshore cash to the Channel Island of Jersey.
Commenting on Cook’s recent statement to The New York Times that Apple had a “moral responsibility” not only to help grow the US economy, but also “to contribute to the other countries that we do business in,” Krach says Apple’s “tax optimization” is about exploiting various loopholes in tax systems around the world.
Mr. Cook, do you believe Apple’s tax payment record comports with the ‘moral responsibility’ you have advocated? Such ‘tax optimization’–albeit legal–is only possible because specialized law firms such as Appleby devise complex company structures inaccessible to most other firms.
Skilled workers, small business owners and employees in most countries outside the US, many of whom surely use Apple products, don’t have the means to shirk ordinary taxes.
Apple up until 2014 had been exploiting a loophole in the Irish tax laws, known as the “double Irish,” which has enabled it to funnel all its overseas sales through Irish subsidiaries.
Instead of paying Irish corporate tax of 12.5%, or the US rate of 35%, Apple’s foreign tax payments rarely amounted to more than 5% of its foreign profits, and in some years dipped below 2%.
As an example, the European Commission calculated that the tax rate for one of Apple’s Irish firms for one year had been as little as 0.005% on billions of dollars of European sales.