[Closed] Apple tax

Don't get me started on Apple. To say the least, I am glad the State is at least calling them out a bit. 👿

Still about 35% on every device sold + every transaction 😉
They tried to made a deal to screw over countries, with guys desperate enough for the cash to do it.

Don't get me started on Apple

Why not?

As per Saxon, I've ranted on here at length about Apple etc and the role of the EU in legitimising tax avoidance. Posted on the EU Referendum thread just today

EU's action is a good first step. Next would be to change eu law to stop Lux, Ireland etc playing these games. Thishas been widely discussed as being necessary for the survival of the Euro. There should be a minimum rate of tax payable. Better still would be taxes on profits paid in the country they are made (defiend as where the item is sold) quite tricky to make that work though, certainly worth the effort as the total tax swerved is in the €100's billions per anum

quite tricky to make that work though

Not really. My employer "sells" our product across Europe and we somehow manage to pay tax relative to where those products are bought rather than hiding everything in one country.

Now that we've voted out. Do we have the right to criticise how the EU runs itself? Or indeed how Ireland manages its tax affairs.

Isn't all the tax avoidance shenanigans just a bit silly, it would be easy align tax policies within trading blocks and even across them.
Money manipulators are just as bad as drug dealers, people traffickers and religous fruitcakes IMO.

And yes we do have a right to comment, trading in stable societies requires public infrastrucure and regulation thats only possible with investment from goverment using taxes.

No taxes no investment, it all goes to shit.

@wilbury re alignment yes in theory, making that work in practice is very hard. Prior to Ireland's bailout in 2008 (?) EU nations stated they had to up their corporate tax rate and Ireland refused. If they weren't going to budge whilst staring at the financial abyss of a sovereign default they are not going to budge for the greater good of the EU.

If we can't get the corporate tax to work we will have to use VAT

All these companies avoiding the taxes we expect them to pay, to raise money for the government to spend on our NHS etc., not to mention making companies play on a more even playing field against home-grown competitors, have a lot to answer for.

As do any governments who create illegal laws to assist these companies, in my opinion.

Agreed noddy. It needs to be sorted out. Apple books 60% of its goobal profits through Ireland

Wow. [b]goobal[/b] actually is a somali word for '[b]state[/b]'.

Don't forget that a good chunk of the revenue booked by Apple in Ireland actually originated from sales in the UK.

Apple (like Microsoft and other largely US headquartered companies) make extensive use of EU laws service companies in order to book revenues where they see fit [s]anywhere they can and get away with not making any contribution to the running of the countries they operate in[/s] so despite making £billions in profit from UK sales they have largely avoided paying the tax due.

So if eire are made to align their tax laws with eu when UK comes out can we undercut it by 2% thereby saving apple millions and raising hundreds of millions for UK state.

I thought the key issue is that Apple have a deal in Eire that is entirely between them and the Irish Govt; which is why it is akin to 'state aid' - ie not that they didn't pay their taxes, more that they had an anti-competitive agreement?

onehundredthidiot - Member

So if eire are made to align their tax laws with eu when UK comes out can we undercut it by 2% thereby saving apple millions and raising hundreds of millions for UK state.

Which is how these sorts of things came about, nations competing with nations to offer the lowest rates to 'book' their income.

Would allowing Apple to pay tax here at 2% lower than Ireland make enough to cover the 2% discount we have to offer all other UK based companies - or do we offer them a special rate?

So IE made a deal with Apple on the amount of tax to pay. Apple paid it over a number of years. Now EU are saying that the deal given to Apple by IE wasn't legal so Apple have to pay IE a huge chunk of extra tax? I can see why they think the decision may be reversed on appeal.

It's not nearly so simple as taxing "profit" where the sale is made. In doing so you are passing judgement on the relative value of intellectual capital, financial capital, branding, wages etc. Which varies enormously in the global market.

If you want to tax wholly geographically you are going to be limited to a tax on turnover which has obvious problems.

The issues are covered in article far more elegantly than I can put them. Will see if I can find it.

Isn't the general point here (or at least what I was trying to make on the EU thread) - is that this a good thing, and would've probably gone unchecked without the EU's investigation.

If Apple begin to suggest it will harm jobs, they have no business being as successful as they are.

So if eire are made to align their tax laws with eu when UK comes out can we undercut it by 2% thereby saving apple millions and raising hundreds of millions for UK state.

Unlikely as we would be out of the EU which would mean a tariff would be slapped on, say 5%? IDS would be fine with it being 10% or so as WTO is fab in his book.

The problem is again down to the concept of the EU.

If the EU is to be one whole glorious super state then taxes go to the EU as a whole and it shouldn't matter where profits are made.

But the EU is way off a system like that and individual states have their own tax systems, and yet the EU also wants the freedom to do business in any member state as if there are no borders and with no penalties for doing business outside of your home state. So the result is a system that lets companies set their profit in countries with more attractive tax as it suits.

And then there's a severe lack of understanding of accountancy and corporation tax, even amongst EU government. It has always been a perfectly normal business practice to defer profits so you pay little tax one year and a lot more another. Combine that with shifting tax about the EU and you have the impression that the likes of Apple are paying *NO TAX OMG!!* , when in fact they are. Just not necessarily where and when you think they should. It still works to their advantage but headline figures of them paying only 1% or less doesn't mean that aren't actually paying a lot more than that elsewhere or in another year. Or in other words are not avoiding tax as much as the dramatic headlines suggest.

It all depends if you think of it as the EU or just the member state. OMG! they paid no tax in [insert-member-state] vs Oh, they paid an acceptable amount of tax in the EU as a whole. Remembering that some of that tax may come back to the member state.

Now that we've voted out. Do we have the right to criticise how the EU runs itself? Or indeed how Ireland manages its tax affairs.

Is it 'us' criticising?

It's not nearly so simple as taxing "profit" where the sale is made.

This is the sort of statement (sorry not a dig) that then leads to the explanation provided by dk and before you know we are being told its way too complicated for you to understand just relax and take it up the wrong'n like a good capitalist.

Thats bollox, its only complicated before it suits lots of people who make money out of complexity.

This is the sort of statement (sorry not a dig) that then leads to the explanation provided by dk and before you know we are being told its way too complicated for you to understand just relax and take it up the wrong'n like a good capitalist.

Thats bollox, its only complicated before it suits lots of people who make money out of complexity.

No actually it IS quite complicated. Take two apple "products" and tell me how much tax you think should be paid on them in the relevant countries:

1. An iPhone. Retail price £600 (500+vat). Bought in an Apple shop. Made in China - probably costs Apple less than £100 including shipping. Designed and developed in the US, if they sell enough devices it maybe costs £50 per device. Perhaps the cost of actually selling it to you (the shop, the staff, the advertising) is £50 per phone. So their Gross Profit is £300. There is a whole load of overhead goes into getting the product onto your shelf, supporting it etc though, lets assume 1/2 of the staff involved in that are based in another european country (like Ireland), 1/4 are here but actually employed by Ireland and 1/4 are in the USA. So, even if the %age tax rates are the same in every country deciding how much is paid where is less clear. It gets even more complex because everyone knows that an iPhone isn't really worth £600 - that is a perceived value attached to the "Apple brand" so the trademark etc, have huge contribution to that overall profit. In a simple world the TM would be owned directly by Apple in the US, but what if it is owned by a subsidiary in a country where no tax is due at all?

2. A song from iTunes from a US based artist. Price 69p (57.5+vat). Perhaps the artist/producer etc get 10p (that is a total guess). The infrastructure for running it all is set up and managed from the US. It cost many millions to create, but now costs much less to maintain. There are mirrored servers in Europe but they cost < 1% of the operating cost of the overall service. There are resources in ireland to promote Itunes, support customer enquiries etc. For the majority of sales though they aren't needed at all and everything is automated from the US. When something does go wrong, on that transaction Apple probably make a loss (just answering the phone costs them more than 69p). As above they owe something for the value of the name. On a simple transaction though there is no real value added in Europe, certainly little in the UK directly.

To blame the EU for Apple's tax avoidance is utterly bizarre, there is hardly any EU direct tax law as the member states, the UK being one of the most vociferous, have always wanted to retain sovereignty over direct tax. There is however considerable harmonization in respect of VAT. This case actually illustrates how the EU can combat its member states offering sweetheart deals so if anything it is a force for good in this respect. The country really missing out on its tax take is the US but their corporate income tax has always been immensely porous.

US IRS seems to have no problem asking its residents to pay tax on global earnings, but its OK for US companies to avoid paying tax on overseas earnings? Double standards, no? Such arrangements are unfair for domestic business too.

sorry poly, I'm not reading that, its bollox and when you've done a few more years in the business you'll know it is. Do tou think anyone in the UK would be buying apple products or media is there wasnt property right supported by courts, safe streets, good healthcare, roads and utlities that supported the businesses that apples customers used to earn money?
Companies that tax dodge are parisites, individuals that help them are scum, if we applied 10% of the effort we do to dodging tax into formulatimg a method to make sure it was paid fairly the problem( but also scumbag profits) would go away.

To blame the EU for Apple's tax avoidance is utterly bizarre

Indeed, isn't this type of thing what the EU doesn't like at all?
No sympathy for ROI or Apple. I hope this is upheld.

1. Companies do not pay taxes - the sums handed over are simply money foregone by customers, staff or shareholders together and/or individually

2. To blame this on the EU is another example of the BS used by Brexiteers

3. States have legitimate claims to set tax rates as they see fit - if they want to compete on the basis of a low tax rate, so be it. Its their choice.

[Even the left wing (!!) Nats wanted to do it in Scotland and they knew (sic) how to combine this with higher spending. But then again their's is a special king of political economics!]

Companies do not pay taxes - the sums handed over are simply money foregone by customers, staff or shareholders together and/or individually

Whilst true, they do provide excellent vehicles for tax deferral.

Also true. Do you/did you ever work for B**Cap, I have never asked mefty!!

Not me guv

Only joshin!! 😀

Many a true word is said in jest.

1. Companies do not pay taxes - the sums handed over are simply money foregone by customers, staff or shareholders together and/or individually

Companies do decide how much tax they pay, the bigger the company the more opportunity to flex as you have more resources. Apple, GMG, and Starbucks are classic examples of how well known companies can do this but there are plenty of others at it

Barclays is just one of many banks working on tax trades.

TMH your list

1. Companies do not pay taxes - the sums handed over are simply money foregone by customers, staff or shareholders together and/or individually

2. To blame this on the EU is another example of the BS used by Brexiteers

3. States have legitimate claims to set tax rates as they see fit - if they want to compete on the basis of a low tax rate, so be it. Its their choice.

1) Yup agreed shareholders and employees worse off. Cook just collected a $100m is stock for hitting perf targets inc relative perf of stock vs market - $250bn of largely untaxed profits / cash on the balance sheet doesn't hirt the stock price.

2)! Freedommof movement of goods and compliant EU member governments is a major factor

3) Can't work in eurozone, won't exist with fiscal and political union which is (was?) the end game

My iPhone/iPad etc isn't going to be any more expensive if Apple has to oay the correct tax, stock price may be lower but we'd have more money for schools and hospitals. If we can't sort the corp tax angle we'll do ot with VAT and import duties.

That sounds so good, I would paint it on the side of a bus

Barclays is just one of many banks working on tax trades.

Not anymore.

What gets me is the Irish Government say they don't want the money. Ireland's population is less than 5 million, so every man woman and child could be given €2,600,000 each. I bet they wouldn't say they don't want it.

EUR 2,600

it's not a "british" billion stavro 🙂

Not anymore.

Not a bad thing.

What gets me is the Irish Government say they don't want the money

How about they pay the money out to the eurozone countries and the UK which bailed them out or the sub-debt holders in Bank of Ireland who got screwed over by the government

stavromuller - Member 
What gets me is the Irish Government say they don't want the money. Ireland's population is less than 5 million, so every man woman and child could be given €2,600,000 each. I bet they wouldn't say they don't want it.

The loss of Apple and such companies is worth more to their economy than a one off tax payment.

Stavro, it's not that difficult to understand. Imagine why Ireland is "home" to so many global tech companies. It's a deliberate and arguably rational choice.

But it is more difficulty for the Irish to work out what to do next as this interesting article suggests (and this if from an unusual Irish angle as you will see)

http://www.irishtimes.com/opinion/we-should-collect-apple-s-13-billion-and-change-ireland-1.2773136?ftcamp=crm%2Femail%2F%2Fnbe%2FBrusselsBrief%2Fproduct

It's a deliberate and arguably rational choice.

Absolutely, Ireland has always produced lots of well educated people but historically many emigrated. The low tax environment brought employers to Ireland and allowed the Irish to benefit economically from the expenditure on education, leading to economic growth and significant improvements in quality of life. Of course they then mucked it up with a huge property bubble.

sorry poly, I'm not reading that, its bollox

how do you know if you've not read it?

and when you've done a few more years in the business you'll know it is.

how long do you think I've done "in business" and at exactly what point will I have my epiphany? If you actually bother to read it, and understand it rather than assume anyone disagreeing with you is wrong, what you'll see is I am saying tax "split" in international entities is not trivial.

Do tou think anyone in the UK would be buying apple products or media is there wasnt property right supported by courts, safe streets, good healthcare, roads and utlities that supported the businesses that apples customers used to earn money?

I'm not sure what your point is? I haven't suggested that tax wasn't due, I just called you out on your previous assertion that "its only complicated before it suits lots of people who make money out of complexity." I am sure it is more complex than it needs to be, and I am sure that there are people making money out of that complexity. But if I (in the UK) go and buy an iPhone this afternoon and then buy a song from Apple tonight how much tax do you think UK Government *should* get from those transactions? If its not complicated you'll be able to explain... [it would be useful if you could also explain how much the Irish, US, and Chinese should get for their contributions to the technology in my pocket].

Companies that tax dodge are parisites, individuals that help them are scum, if we applied 10% of the effort we do to dodging tax into formulatimg a method to make sure it was paid fairly the problem( but also scumbag profits) would go away.

To a large extent I agree, although I think as soon as you use emotional language like parasites and scum you are starting to lose the argument. Now, if a country identifies that it would be in its interests to attract jobs, investment, research and development, etc. should that country be able to incentivise businesses to bring those benefits to its shores through taxation policy? should companies ignore such incentives? if our employment, pensions, economy and therefore government success are entwined with the success of business then is it actually in the "public" interest to expect business to behave in an altruistic or philanthropic manner rather than focus on commercial success? You see, its easy to say that anyone who disagrees with you is wrong, but until you present a clear thought out solution that works on a global scale then your arguments are just soundbites. When you've done a few more years in international politics/economics you'll see that 😉

http://www.apple.com/ie/customer-letter/

Apple write...

Edit: a far more polite response than I was about to muster, there poly.

As a layman, I see it like this. Apple and RoI come to an agreement that allows Apple to establish a facility in Cork. This agreement is followed over the years, the business thrives and the local economy benefits. The EU subsequently investigate and demand that a significant retro payment is needed despite neither Apple nor RoI wanting this. This could influence future investment both from existing and potential future employers. I would imagine EMC are also watching how this plays out very closely.

If is affects future investment adversely then I would imagine that the effect on RoI would be worse than the benefit enjoyed from receiving £11bn.

The EU subsequently investigate and demand that a significant retro payment is needed despite neither Apple nor RoI wanting this.

So Apple then has a choice, where does it base it's EU HQ, where does it run it's profits to be tax efficient? Pick the next country to save some cash in?

Apple hire a few 1000 people in Ireland (mostly admin jobs processing contracts, cash payments etc ... ? ) and the EU loses £30-40 billion in taxes (corp tax rates are much higher in rest of Europe than in Ireland)

Apple is a spectacularly successful and highly profitable business which pays very little tax relative to its earnings and who's stock price is elevated as a result and who's executives benefit greatly via share's held and performance rewards as a result.

The tax system is totally F'ed Up

Yes Ireland and Luxembourg have made a rational judgement, they drove a coach and horses through, up and round tax law for their personal gain and to the detriment of funding for schools and hospitals throughout the EU.

If is affects future investment adversely then I would imagine that the effect on RoI would be worse than the benefit enjoyed from receiving £11bn.

Could well be, but without this sweetheart deal maybe Apple would have created some jobs in, oh, I dunno, Sunderland. Then the good folk of Sunderland would have seen the benefit of EU integration and voted Remain etc etc.

On another subject it would seem highly amusing that the Ireland finmin who was mouthing off so loudly about Greece's tax affairs last year is now not so enthusiastic about EU oversight.

The taxes would never have been due in other EU countries, the super profit is attributable to intellectual property which was predominately developed in the US - hence it is the US who have lost their tax take - not the EU.

mefty +1

Jambas - you are letting your anti-EU obsession cloud ypur judgement here. One thing Brexiteers have to deal with is that your folly makes tax harmonisation more not less difficult.

One approach is that companies should pay no tax, but distribute all profits to individual shareholders.

If the shareholder is a national then appropriate tax is paid by him or her, if they are an overseas shareholder then a deemed amount equal to individual tax should be deducted in lieu.

ok, so i thought/assumed that this thread was something about the price paid for any apple product, regardless of its actual functional usefullness.......
so imagine my surprise with the STW thread about "apple-tax" was on the news last night.

doh.