Linked by Thom Holwerda on Thu 1st Sep 2016 22:42 UTC

Matt Gardner, the director of the Institute on Taxation and Economic Policy, took a look at Tim Cook's terrible letter to EU consumers regarding Apple's tax evasion, and pretty much tears it to shreds.

Apple created a complicated web of subsidiaries to avoid taxes, and the Irish government allowed it. Both the company and the country were complicit in this agreement. The idea that Ireland gave Apple guidance on "how to comply correctly with Irish tax law" makes both parties sound less guilty than they are. A better characterization would be that Apple cooked up a tax-dodging scheme, and Ireland allowed it.

Further along, Gardner actually opens up a major can of worms, arguing that either Apple provided false figures in its annual report, or Tim Cook is lying in his letter to EU consumers:

It doesn't appear to be even remotely truthful based on the numbers they publish in their annual reports. Each year they report that the majority of their profits are earned outside the U.S., with roughly a third (on average, over the past five years) coming from the U.S. When you look at the 10K, the annual report for 2015, you see the company reports earnings of $72 billion worldwide, and just one third of those profits are attributed to the U.S. And yet Cook's statement says that the vast majority of their income is taxed in the U.S.

We think that is a very low estimate. It certainly appears that the company is shifting profits out of the U.S. and into tax havens overseas. So one of these things must not be true: Either the numbers presented to shareholders in their annual report are false, or Tim Cook's new statement that the majority of its profits are taxed in the U.S is false. They both can't be true.

That's a bold claim to make, but it's hard, if not impossible, to argue with Gardner on this one. Since it's incredibly unlikely Apple is falsifying its annual reports, the most logical conclusion is that Tim Cook is lying in the open letter.

Tim - if you find yourself in a hole, stop digging.

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Member since:

Disclaimer, I live in Ireland, there could be some bias ;) , though trust me this very much splits Irish opinion...

It's clear that something wrong when you pay only 0.005 percent tax while the official rate is 12.5%

Most companies pay 12.5% but not the big multinational companies and the EU is right to attack this. Note, I don't think it is against European law to set 12.5% corporation tax as long as all companies pay that rate.

The only question I have is this: this was known since the early 90's. Why now suddenly? It seems almost as if some politicians in Brussels have the (right) idea of stopping this type of practice but don't dare a full frontal attack of putting it on countries national agenda including the USA, instead opting for an easy target that won't cost them political currency.

The Irish seem to be much divided about this too. Some think is absurd that multinationals get away with no tax at all - applauding the EU, others are afraid multinationals will leave (137000 jobs on 2 million). Others like the windfall the 13 billion might bring. And others think that the EU shouldn't interfere in a matter between Apple and the Irish state retro-actively and should only stop this deal from now onwards.

Reply Score: 2

phoudoin Member since:

I guess the tax avoidance schema in itself is not an issue until you're known to make big profits.
Before iPhone big success, Apple in EU was making far less exceptionnal profits than, at time, others foreign companies.

Hence why now (well, 2013 actually) Apple tax structure was put under scrutiny, not long before.

Reply Parent Score: 2

Thom_Holwerda Member since:

I guess the tax avoidance schema in itself is not an issue until you're known to make big profits.

Actually, it's the other way around all over the world. Try paying even €10 too little to your local tax agency, and see how quickly they find you.

Reply Parent Score: 1

Carewolf Member since:

Well, Apple was not making less profit in the EU, they were making no profit, they were losing money in the EU before the iPhone.

About the timing: They got a hold of the secret letters between Apple and the Irish government. Those are the critical evidence that the deal was illegal and always had been illegal. Before that the deal had already been abandoned in Ireland due to being bullshit, but only for future tax.

Reply Parent Score: 2

dsmogor Member since:

Why now?
I think it's combination of several factors:
1st the climate for assault on big tax avoiders have become much better lately esp. with revelations like Panama Papers.
2nd Brexit has also put a big question of legitimacy before EU institutions and EC specially. They (or some particular members) are trying to re-gain some credibility with more and more upset citizens.
3rd the US is now in vulnerable state being a couple of months before the elections with an unpredictable "black swan" candidate. They won't start a trade war with the EU now, especially that Obama is determined to close TTIP negotiations.
That creates an unique window of opportunity.

Edited 2016-09-02 19:26 UTC

Reply Parent Score: 2

Wondercool Member since:

I like your cynical thinking, you could well be right.
Maybe I have even blacker thoughts as I think that point 1 didn't matter in the bigger scheme of things.

Yes, the Icelandic prime minister was sacked (Iceland seems to be one of the very few countries left where people are willing to protest) but nothing really changed that much. There were about 30 people named in shamed in the paper but nothing happened.

Reply Parent Score: 2

dionicio Member since:

Maybe not wanting Brexit to become UKexit?

Reply Parent Score: 2

VistaUser Member since:

I doubt the multi-nationals will leave.

AFAIK Taxes on EU profits have to be paid within the EU.

and Irelands corporate tax rate of 12.5% is far lower than most countries around the world, let alone in the EU.

12.5% is still a sweetheard deal instead of having to pay almost double that in some countries, or 35% in the US.

Edited 2016-09-02 21:49 UTC

Reply Parent Score: 3

Wondercool Member since:

This is what why I don't understand the Irish government through the decades: they already have a good deal out there, why go from 12.5 to 0.005 percent.

There is no reason for it! Except maybe some brown envelopes exchanging hands?

Reply Parent Score: 3

JAlexoid Member since:

A) Multinationals will not leave, that is absurd.
B) There are stricter rules that apply ever since the Lisbon Treaty.
C) Believe it or not, but EC is not omniscient and doesn't know and verify everything and all. So the delay is unsurprising
D) Considering that there is a big move towards weeding out tax dodging , I'm hardly surprised that they are focusing on taxation now. (The tax avoidance issues were unanimously set as one of the most important issues for EU a few years ago, by the elected heads of executive branches of EU member states)
E) Why from now on? It should be applied since the time that the legal basis for invalidating the deal was valid. EU has not had a change in basic laws since 2009.

Reply Parent Score: 2