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:

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:

I believe it's more a case of the ROI striking a deal with Apple to allow their financial flows to move unobstructed in such a way, that their declared profits would be taxed at 12.5%. But the amount of the declared profits would result in the effective tax rate of 0.0005%. If you take into account that the politicians knew it and Apple's legal team knew that they were dodging the 12.5% - it's very much illegal in the context of EU treaties.

Many US corporations pay $0 in tax, after all of the loopholes. I believe GE paid $0 in 2014.

Reply Parent Score: 2