Apple Inc. may be facing a hefty tax bill in Europe.
The world’s largest company could owe more than $8 billion in back taxes as a result of a European Commission investigation into its tax policies, according to an analysis by Matt Larson of Bloomberg Intelligence. Apple, which has said it will appeal an adverse ruling, is being scrutinized by regulators who have accused the iPhone maker of using subsidiaries in Ireland to avoid paying taxes on revenue generated outside the U.S.
The EC is investigating a whole slew of companies for tax avoidance, and that is, of course, nothing but a good thing. These shady constructions that only benefit the extremely wealthy have no place in any modern society.
Too darn right! I had to buy an Mac in December.
(Because I have software that needs to be ported to OSX; the reason that I needed to port it is that people who haven’t got any reason to get a Mac bought one and now want my software. The only good reason to get a Mac is mine; any other reason is bogus.)
I bought it in the Netherlands. From a website in Dutch, with a .nl extension. I paid Dutch V.A.T. There are people working for Apple, in the Netherlands, who are selling these outdated, overpriced pieces of crap. Those people pay their income tax in the Netherlands.
The computer was delivered from China. The shipping route passed Korea, Kazachstan and Germany.
But the _bill_ ostensibly came from Ireland.
This computer was never sold from Ireland. Nothing in Ireland was even remotely concerned in manufacturing, stocking, selling or servicing this computer.
The Netherlands got plenty of money from the deal, with a 21% VAT rate, no?
Seems like the corporate tax should have gone to China, not Ireland. Or maybe to the USA where the Apple is actually headquartered?
No, the Netherlands didn’t get plenty of tax through VAT. When it comes to VAT, the mac was bought for my company, so, because this is a device bought for production, can deduct the VAT from that VAT I get from my customers before paying the remainder.
But it’s not about VAT, it’s about the tax on profits. My company pays taxes on its profits, so Apple should do so, too. They operate in the Netherlands, so the income they generate in the Netherlands should be taxed in the Netherlands. Ireland, or the US, or China are irrelevant.
Here’s my longer take on this: http://www.valdyas.org/fading/index.cgi/hardware/macbookpro.html
ACtually, that reasoning is bogus.
Every company operating in the Netherlands has to pay these same “more than enough” taxes as well. In surplus they have to pay taxes on their profits as well.
I get that the goal of all these tax rules were to avoid forcing companies in paying the same tax twice, as it turns out, they are not paying their due taxes once anymore…
This reminds me of the reasoning of Colruyt in Belgium ‘We pay the highest amount of taxes, so we are due to paying a lower percentage…”.
The People employed by Apple in the Netherlands do indeed pay their income tax there. Apple will also pay the employment taxes levied by the Dutch Gov on their employees to the Dutch Gov.
The gripe is over Corporate Taxes. i.e. the taxes due on company profits. Some US Corporations (eg Starbucks) operate licensing scams from Luxemburg where the company there charge the entity in say Belguim a sum equal to the profit made as a license fee. Whoosh, there goes the corporate profits and not tax is due.
Apple is not alone having thise EU domicile in Ireland. Microsoft, Google and Adobe are amongst other companies that are taking advantage of this deal with Dublin.
If Apple has to stump up then they won’t be alone.
The whole thing is a total mess. A lot of it is brought about by companies not wanting to pay tax twice on any profit they make. US Tax law is also part of the problem.
The problem is that one man’s “loophole” is another’s necessity to exist at all.
An international company that is being taxed twice will not exist for long. It can’t compete against native companies.
And native companies that need to buy things from other nations need these “loopholes” or they can’t make money either.
Buying copies of Microsoft Windows to run on desktop PCs in Holland for example. That money goes overseas and is taxed at the receiver. It is also a business expense in Holland which usually gets some kind of tax break.
Because of the strangeness of laws, Microsoft-USA and Microsoft-Netherlands are not considered the same company. So the “loopholes” that allow businesses to make money and compete across national boundaries also have these strange tax dodging effects.
The problem is how do you usefully define an abuse as opposed to the proper use of these tax laws. Do you just “know it when you see it?”
For example, lets say Microsoft or other company just renames all of its international companies so that they don’t contain the word Microsoft. Now what standard do you use to determine tax evasion?
Companies don’t pay taxes – they simply pass the extra cost onto the consumer. If the taxes didn’t exist
consumers, shareholders and employees would all be better off.
The real reason why American corporations use tax havens and transfer pricing is because the USA has ludicrously high corporate taxes.
You’ve never been in France, have you ?
Governments actually doing something about the tax loop hole and fair competition this simply doesn’t happen.
The UK Government at the end of 2014 changed the rules on online gambling so the winnings were taxed where the player was, not where the bookmaker was.
This important difference and the fact that the are hundreds of bookmakers in the UK means that profit margins are razor thin in the gaming industry and they can no longer rely on on school punters.
Edited 2016-01-16 11:53 UTC
The only beneficiaries of corporate taxes are politicians, accountants and lawyers involved in tax minimisation schemes.
Virtually every large pension fund in the world has investments in Apple, Google etc. Paying more corporate tax just means higher prices, lower dividends and less jobs.
unclefester,
My opinion is that government has pandered to corporate interests for way too long. Corporations (and governments) should just be a means to an end, which is to serve the people. To the extent that they’re unwilling/unable to contribute meaningfully to society then the incumbents ought to be dismantled and replaced by entities that can.
The majority shareholders in most corporations are government and private pension funds. In other words ordinary people are the (indirect) owners.
In the case of Apple Inc 60% of shares are controlled by 2440 different mutual and investment funds. Only four individuals own more than 100,000 Apple shares each and only two individuals own more than 1 million shares.
https://finance.yahoo.com/q/mh?s=AAPL+Major+Holders
unclefester,
So while it’s technically true that some of that is owned by the “ordinary people”, make no mistake that pro-corporate monetary policies are predominantly benefiting the upper classes. At the same time, these generous tax discounts for corporations come at the expense of health care, education, and social security programs, which disproportionately adds to the financial burden of middle class families.
Personally, my mind’s not set in stone that government funded social programs are the best use of money. But, then that money should at least go back to the families who need it to pay for their healthcare, education and retirement. Using the money to pay for corporate tax cuts which predominantly benefit the wealthy, damn that’s cold… but alas, not very surprising given corporate influence over government monetary policies.
Edited 2016-01-17 10:25 UTC
Actually they do pay taxes. At least in a free market they would. They can only pass on so much before they start losing clients and hence losing more profits than they would lose on taxes.
Edited 2016-01-17 00:35 UTC
Here, that kind of behavior nets you a congressman and maybe an audience with the Pope.
Looks the $8 billion story is not true
http://www.forbes.com/sites/timworstall/2016/01/16/apple-is-not-fac…
This is an issue related to the question of State Aid – something which is against the EU rules, but the rules are enforced on governments not companies.
From the article:
This seems to be part of the continuing campaign by Brussels to force Ireland to change its corporate tax system. The Apple related headlines are just part of the current bad-Apple-news feeding frenzy. I expect this to abate briefly after the release of the latest Apple financials in a few days but then it will restart – ‘Apple in trouble/doomed’ a story for all seasons.