Apple 'hid AUD$9 BILLION' from Australia alone: Report An Australian newspaper is claiming that analysis of Apple's Irish subsidiary's finances demonstrates Cupertino's skill at offshoring its revenues is saving the company billions it would otherwise have to shell out in tax. The Australian Financial Review alleges (warning: may be paywalled) that over a ten-year period, Apple …
Given their stance on doing business here from servers in Eire yet all their sales droids are here and paid fron Google UK Plc. (same goes for MS, Adobe and a host of others)
As another post says, it is beholden on the various governments to fill in these loopholes. But given the size and number of 'potholes' in my area that will be a long time coming.
This is despite it not requiring many brain cells to realise that the income from the dodgers could be used to fix a lot of the damage we have seen from the winter.
An clear example of unconnected thinking by Governments can be seen in San Francisco. Google subsidize travel for low income children yet are taken to task for bussing their employees to work thus recreasing road congestion.
@Gray Ham, I'd pay to see that! But you're right, it won't happen.
The thing is, I imagine Apple does pay whatever taxes they're required to because otherwise the ATO would tear them a new one. The problem is not some companies paying bugger all taxes, it's that we have retarded laws that let them do so legally.
"Now I wonder if the government could be persuaded to shut off water, electricity and street access - the trivial kinds of things taxes pay for - to Apple stores in this country."
I don't know how it works in whatever country you are from but over here Water and Electricity are paid for by paying a water or electricity bill to a company, not by taxes paid to the government. Street Access is granted as part of the money paid to buy or rent the store, which is taxed at the normal rate and is unavoidable, even by Apple.
People in need aren't Apple's primary, secondary or even tertiary market targets. So, any wonder they don't give two woots about them?
Don't be pissed that Apple does what it legally can do, be pissed that you (and mine) government(s) gave them the tools to do it. Be doubly pissed that they allow it to keep happening. And end up asking yourself WHY don't they just close the loopholes.
The immorality of Apple's actions is made worse by the huge cash pile they are feeding with their tax avoidance. I can only assume that Cook et al have a Scrooge McDuck fixation that makes them want to horde $100bn and counting, while at the same time the folks that screw their iDevices together struggle to survive on pittance a week.
Morality is subjective. What you consider immoral may not be considered immoral by someone else.
A corporation exists for one purpose: To generate profits for its owners. Corporate accountants exist for one purpose: To ensure a corporation complies with tax law as it is written. That the two combine to ensure that the corporation generates as much profit as possible within the tax law, is, well, natural.
Morality, subjective 'spirit of the law', and all that warm fluffy human stuff does not feature in any equation, that's why there are laws. They apply the same fluffy human stuff equally without human intervention. If you don't like it, become a politician and change it. However, you'll find that your political colleagues/opponents may have different priorities to you wanting to change the world to a warm fluffy one.
It shouldn't be so hard to fix, conceptually at least. Whenever the company transfers money to it's parent/service organisation, the company must prove that it pays equivalent tax at the same rate as it would in Australia. Any deficiency in tax paid (eg if the other country taxes at a lower rate) would be taxable in full.
Obviously I don't just mean Apple here. Google, BHP, any company that operates in more than one jurisdiction would be picked up.
Assuming that we are talking about what is technically legal, it’s surprising how much sympathy Tax department is suddenly getting.
We are taxed on practically everything, and denied many legitimate tax deductions (such as travel and spectacles). Paying taxes has become a competition to see who can con the most out of the other.
When the government does get their cut, they squander it on poor and inefficient infrastructure, mismanagement and general wastage. When they actually get something working, they then charge us extra for the service.
Most of us grumble, not because the government is being deprived of their rightful share, but because we haven’t been able to achieve the same success.
In any case, tax is only one of many ways of contributing to the community. Given that Apple’s profit is less than 100%, for every dollar spent on an Apple product, money has contributed to wages, manufacture, rent and other costs paid to others. Third party accessories and equipment also benefit.
Sure, potential tax money from Apple is not insignificant. But it’s only a small percentage of the flow on financial benefits to the rest of the community.
@Mark Simon,
"But it’s only a small percentage of the flow on financial benefits to the rest of the community."
Are you crazy? Apple drain billions away from countries all over the world without paying tax to the locals, and in return they give jobs to a few kids in blue shirts. They pay some money to Foxconn, but Foxconn don't make that much out of it. They don't even give the money to their shareholders, not really; they just persuade lenders to do that for them on their behalf.
Apple just pile it up in Ireland and don't do anything useful with it there either.
Given the extent to which this seems to be happening, it must be tempting the Irish government to tweak their laws a little bit and snaffle the lot in a one time tax raid. A rate of 40% on inactive corporate funds that are simply resting in the country would go a very long way to sorting out their balance sheet!
It wouldn't really effect the economy in terms of companies pulling out and people losing jobs. I don't suppose these shell companies are actually economically active in Ireland.
One, Apple, Google, Microsoft and everyone else parking revenue in Ireland would move them somewhere else before that 40% tax became effective. Surely they all have a backup plan or two for all sorts of eventualities, including that.
Two, if they weren't able to do that - say if the government froze assets and prevent that move, Ireland would have to learn to live on that money for a few long time, because they'd never have another foreign business set up shop there again, and any Irish business that was able to move its offices overseas would do so, knowing that they could be next.
No, it would do nothing.
Apple Australia don't make anything. If I import stuff and sell with a low markup, most of the profit on the item isn't made by me, its made by the person in the country I bought it from. If I start buying Samsung phones in Korea and ship them to Oz for sale, that ATO doesn't get a bite at the profits of Samsung Kr. All it gets is a slice of my AU-based organisation profit.
Selling Apple kit in Australia isn't that profitable. Making Apple kit is profitable, but that isn't done here.
How would Australia like it if the US wanted to tax Australian firms because it thought it wasn't getting enough ta out of things from Australia sold in the US?
Bad analogy.
You aren't Samsung. You import Samsungs for $100 and sell them for $100.10, your profit is small, your tax is small.
This is Apple buying from Apple. Apple Australia importing Apple goods from Apple Ireland for $100 and selling them for for $100.10 in an Apple Store. It is an obvious artifice designed purely to get around the taxman. There are laws to prevent that sort of garbage and they should be enforced.
And the laws should be changed so that if these obvious tax-dodge-subsidiaries don't stop hiding profits they should start taxing them on their turnover instead.
Selling Apple kit in Australia isn't that profitable. Making Apple kit is profitable, but that isn't done here.
What????????
Foxconn make very little on Apple kit, you are talking pence / cents per item. The general consensus for Apple iPhones is about 40% profit on each one (estimates are between 30 & 40%).
"Not wanting to be seen defending Apple here, but they do actually provide a lot of employment in Ireland - 4000 jobs at the last count..."
... and how many of that 4000 would be allowed to get away with paying practically nothing in comparison to their earnings to the tax man, my guess would be somewhere between none and zero, but while the loopholes exist and new ones are found, large companies like Apple, Google and the myriad of other companies using the same tactics will continue to pay as little tax as they can get away with.
... and how many of that 4000 would be allowed to get away with paying practically nothing in comparison to their earnings to the tax man, my guess would be somewhere between none and zero,
Stop talking rubbish - that's not the point I was making and you know it.
The little guy's always had to pay his taxes while businesses can practice tax avoidance - such is life. Tax avoidance is legal unlike tax evasion, although some Daily Mail types find it convenient to blur the distinction between the two.
So they employ 4000 people there, earning a wage, paying tax and spending their money in the local community... Why would the government jeopardise that number of jobs by raising corporate taxes? Apple would just piss off to Poland like Dell did, and the government would have to make 4000 extra dole payments every week.
The question is, what is the cost of the product when it is imported into Australia. If your position is that it is only the cost of manufacturing it, you are assigning zero value to Apple's R&D, software, ecosystem and whatever extra buyers are willing to pay because it is an Apple instead of an Acme.
What Apple is doing is legal, in Australia, in the US, and in Ireland. If you don't like it, try to get your government to change the law in your country and hope others get their governments to change their laws. Just know it won't only be Apple you affect, but every high tech company, because they all do exactly the same thing.
You might find these companies are less likely to do business in your country after this. If you dislike Apple, you may not care, but do you want Google, Samsung, and Microsoft to limit the business they in your country as well?
"You might find these companies are less likely to do business in your country after this"
I've never understood this, so I'll just put out why I don't quite understand and someone can inform me.
If there's a profit to be made in Australia from selling Apple stuff, then aren't Apple going to be wanting to get their gre... hands on that profit?
Does Apple having to actually pay tax in Australia mean that the demand for Apple hardware will suddenly go down? Does it mean Apple will increase prices (presumably only to the extent the market will support)?
I might - as an individual - have a really bad doing trade somewhere (aka that cashier was really rude and the floor was dirty) and decide not to conduct business there, but will a big corporation like Apple really shut down their Australia operation because they are being forced to pay tax? Or will they continue? Surely even 10% of profits are better than 0%?
It wouldn't really effect affect the economy in terms of companies pulling out and people losing jobs. I don't suppose these shell companies are actually economically active in Ireland.
Not wanting to be seen defending Apple here, but they do actually provide a lot of employment in Ireland - 4000 jobs at the last count...
The Irish government isn't about to rock that boat any time soon.
If you don't like their practices, vote with your wallet and actions, just stop buying the products/services they produce. It won't take too long for them to notice if the outraged public took this step - certainly, it would be quicker acting than any government (in)action.
Given the scale of these companies, unfortunately just a handful of moralistic activist individuals won't make any difference though.
@Paul Leigh - Generally, I'm a fan of voting with my wallet, and do so. The problem is that it only works if there is a preferable alternative. In this case, if Microsoft, Google and Apple are all doing the same thing, I can't avoid them & still get certain things, like a smartphone. Given the demand for smartphones alone, most people aren't going to boycott enough products from any of those three companies for them to notice, unfortunately.
Given the small Aussie population that would mean $40 billion or so missing from the UK exchequer accounts for taxing.
'Trickle down' standards come from those who can afford it.
There ain't any here cause Apple 'standards' are proprietary shite.
The sooner Apple are gone the better for us all.
Tax cheats? By what measure?
You may not like what they are doing. I might not like what they are doing. It may be morally wrong yes. But many large businesses don't let the morality play interfere with their business plans.
What they are doing is entirely legal - and supported by all of the governments and tax authorities around the world. If it was illegal, action would have been taken by now to close the loopholes.
But action won't be taken because most of the individuals, governments, tax authorities, G8, Bilderburg group et al - all have their snouts in the trough, and woe betide anything or anyone that threatens that happy (if shadowy) arrangement.
This is sadly wrong.
"This is because ASI and its parent, Apple Operations International, manage to fall between US and Irish tax law: America doesn't tax the operations because they're not US-registered; Ireland winks at them because they're managed in the US."
Those profits are indeed taxable in the US. But only if they are actually taken into the US. Because that's what US tax law says: foreign profits are taxed only if they are moved into the US.
This is why Apple has vast cash piles outside the US yet borrows money inside it to pay dividends and fund stock buybacks. Because it doesn't want to take those foreign profits in and then pay US tax.
This all might be a good idea or a bad one. But it is the way that it is and those Oz, "experts" really ought to try and understand what is going on before they pronounce.
Oz experts should be allowed to pronounce all they want on the profits of a company operating in Australia. Whats the deal here, US tax laws are stupid, Irish tax laws are stupid, Apple has expensive accounts, therefore Australia can't have any money? Pffft. Australia is a sovereign nation and they can change their laws or enforce them properly and extract as much money from Apple Australia as they like and if apple don't like it they can fuck off.
Yes, Australia could indeed change their tax laws as they wish, give or take whatever international tax/trade treaties might apply - so, why don't they? Maybe because all the other taxes (GST or whatever it's called there, income tax from Apple's staff, property taxes on the shops, import duties on hardware) mean the government's already getting its pound of flesh anyway, so doesn't need to squeeze any harder?
If I buy a £600 iThing here in the UK, £100 of that already goes straight to the government in VAT. Then the shop I buy it in pays thousands a month in business rates, and more in payroll taxes ('employer's NI' here) for employing staff to sell stuff.
I do lean towards the idea of taxing turnover instead of "profit" (because, as Apple's accountants demonstrate, the amount of "profit" you make and pay taxes on is pretty much whatever number you want it to be, while turnover is pretty much fixed) - but then, that's pretty much what GST/VAT delivers already, so why bother duplicating it?
I take it you don't know how VAT works?
Company 'A' Ireland sells the iShiny to Company 'A' UK for £599
Company 'A' UK tax accountants then offset the VAT on that £599 with the VAT on the sale of your £600 iShiny.
Net effect.. UK Gov get the VAT element of that £1
17p sterling.
Company 'A' Ireland then pass on the profits to whichever tax haven they like, through a convoluted, although technically legal, path and the net effect is that Company 'A' pays a pittance on that £600 in VAT.
Taxing an organisation is the same as indirect taxation.
What good will it do to tax profits?
All that does is put money into state Treasury and that has no moral value at all - in fact it could be argued that taxation is an immoral act.
Besides there is a folly that assumes money is in limitless supply - it isn't. Money is finite and countable that is why most people don't have any and what little they have is taxed to some ridiculous extent.
The UK tax system is the most efficient way to take money from the poor and give it to the rich?
Interestingly not a part of the United Kingdom but self-governing possessions of the British Crown which lie outside the UK, the EU and the Commonwealth.
Not to say that they don't join in with some activities of the aforementioned august bodies...
If you do have a problem with their tax affairs, I suggest you direct it to the Duke of Normandy.
Put a banking transfer tax on all transactions over a certain total or if they hit a threshold frequency of transactions (to stop them hitting the certain total limit).
So if a certain corporation wanted to transfer money from Australia to Ireland (for the dodgy purchase of items). If they tried to transfer it in a lump sum, you tax them on the lump sum if it is over say 100 million... and to catch them if they decide that to try avoiding paying the lump sum tax, they would transfer 10 lots of 10 mill... and did it all on the same day or spread it out over 10 days... at the end of the period, you hand them a tax bill for the total amount transferred out over time.
Either way... the government ends up getting the tax money... and to make sure that you set the frequency transaction tax at slightly higher than the lump sum tax. So if the lump sum is 25% of the total, then the frequency transaction tax is 30%. They will get the hint sooner or later that they can no longer avoid taxation.
WTF? When did this get to be the job of the government? I can understand about the basic infrastructure, but feed and clothe?
If you want to feed and clothe, then change the tax law to do two things:
(1) punish the hell out of companies that offshore jobs
(2) benefit those companies that create more on-shore jobs at liveable wages.
would it not be possible for the government to block Apples websites, as Stephen Conroy was so willing to do to save us from ourselves, until they pay the rightful amount of tax? just think how long they would go without the iTunes store running. call it blackmail if you like, but I just think it might work
"as Stephen Conroy was so willing to do to save us from ourselves, until they pay the rightful amount of tax?"
Apple already pay the "rightful amount of tax" - the ATO insures this - and for the non-Australians, the ATO (your IR or IRS) are rightly and commonly compared to rabid dogs. The question at hand is whether the amount Apple pay is enough (or indeed too much).
One can argue that income tax is immoral and that it should not exist. Those to the left of Marx might argue that anything less than 100% is too little.
The point is that this is a question of degree, and the poverty stricken Apple hating freetards expressing their outrage here add nothing intelligent to the discussion.
I know for a fact the ATO would have me in court on day one if I tried the same caper. There are perfectly applicable tax laws in place to pursue companies and individuals for companies that do nothing other than tax avoidance. The question is, why are the laws only applied in court to minnows and not whales?
http://www.ato.gov.au/Individuals/International-tax-for-individuals/Previous-years/Investing-overseas/Tax-havens-and-tax-administration/?page=24#Fraudulent_tax_scheme
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