Paradise Papers expose how Apple avoided billions in taxes!
The Paradise Papers revealed how Apple -the world's most profitable company- avoids billions in taxes using a secretive strategy. They show Apple "sidestepped" the 2013 crackdown on controversial "double Irish" tax arrangement and "shopped around" for a tax haven. They say Apple later moved one of its firms, holding $252bn untaxed offshore cash, to the Channel Island of Jersey, a tax haven. Know more!
Changes didn't reduce our taxes in any country: Apple
Apple claimed its new tax structure didn't lower any taxes, and it paid $35bn in corporation-tax in the last three years, remaining the world's biggest taxpayer. Apple stressed it shifted none of its operations or investments from Ireland. Paradise Papers show Apple moved the majority of offshore profits to Jersey after the US and the European Union cracked down on the Irish tax arrangement.
Tax loophole reduced Apple's foreign tax payments
Apple exploited the Irish tax loophole in the US and Ireland until 2014. Using the strategy, Apple could channel its sales outside of the Americas through "effectively stateless" Irish subsidiaries that hardly incurred taxes. It avoided paying 12.5% Irish corporation tax and the US's 35% through the arrangement, which also reduced tax-rates on Apple's offshore profits that rarely went beyond 5% of the profits.
Apple doesn't depend on tax gimmicks: Tim Cook
In 2013, Apple faced pressure in the US Senate for the country was missing out on massive amounts of tax due to the Irish tax arrangement. At the time, CEO Tim Cook defended the tax strategy, saying: "We pay all the taxes we owe, every single dollar. We do not depend on tax gimmicks. We do not stash money on some Caribbean island."
Apple "shopped around" for tax havens: Paradise Papers
In 2013, while EU was investigating Apple's tax-strategy, Ireland decided firms incorporated in the country cannot be "stateless" for tax purposes, after which Apple searched for a new tax haven. In Mar'14, Apple asked offshore finance law firm Appleby (major Paradise Papers leak source) what tax benefits in different overseas jurisdictions- British Virgin Islands, Bermuda, Cayman Islands, Mauritius, Isle of Man, Jersey, and Guernsey.
Apple wanted to keep its "search" a secret
Apple sent a questionnaire to Appleby asking if it was possible to obtain an official tax exemption assurance in those offshore jurisdictions. It asked if Irish firms (for its Apple Operations International and Apple Sales International) can "conduct management activities without being subject to taxation." Later, Apple selected Jersey, which has its own tax laws and a 0% corporate tax for overseas firms.
Apple moved key subsidiaries to Jersey after Ireland crackdown
The Paradise Papers documents also reveal that Apple's two key Ireland-based firms - Apple Operations International (AOI) and Apple Sales International (ASI) - held $252bn in untaxed overseas cash. They also show that Appleby's office in Jersey managed these two subsidiaries from early 2015 until 2016. This new "change" in Apple's corporate structure apparently allows it to continue avoiding billions in foreign tax.
Apple received illegal state aid in Ireland, rules EU
In 2016, EU found Ireland offered illegal tax benefit to Apple and ordered the tech-giant to pay $14.5bn in unpaid taxes and interest for 2003-13 to Ireland. Apple and Ireland appealed against the ruling. However, Ireland later agreed to collect the unpaid taxes. In Oct'17, Ireland said it needed time after EU said it would take it to court for not collecting money yet.
Ireland changes tax regulations after "double Irish" crackdown
In 2015, after the Irish tax loophole was closed, Ireland created new tax rules that still offered advantages to international firms like Apple. Ireland's GDP jumped 26% in 2015; the spike was attributed by media to movement of intellectual property assets into Ireland. Interestingly, Apple Sales International had rights to Apple's highly-valuable intellectual property. However, Ireland denied that new regulations offer benefits to MNCs.
Paid $1.5bn in tax to Ireland over 3 years: Apple
Apple said: "When Ireland changed its tax laws in 2015, we complied by changing the residency of our Irish subsidiaries and we informed Ireland, the European Commission, and the United States. The changes we made did not reduce our tax payments in any country."
