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May
2013
21

iHaven: From ’09-’12, Apple Successfully Shielded “At Least $74 Billion” in Tax Dollars from U.S. Treasury

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According to a Senate Permanent Subcommittee on Investigations report issued Monday, Apple has avoided paying tens of billions of dollars in U.S. taxes by shifting money to offshore tax havens.  Apple has been able to cut some of its tax rates as low as 0.05% by using a complicated web of offshore entities.  

Of the discovered subsidiaries, three are based in Ireland and are set up to not have tax residency in any country. The report finds that Apple successfully moved “at least $74 billion” out of the reach of the IRS between 2009 and 2012.

Ranking members of the Senate Committee decried Apple’s “tax gimmicks.” On Monday evening, panel chairman Sen. Carl Levin of Michigan said:

The secret to Apple’s business success isn’t in the aluminum and the steel and the glass of an iPhone.  The genius is the ideas that bring those elements together in an elegant package. That intangible genius is intellectual property … nurtured and developed here in the United States. And yet, it ends up that most of the profits are shifted to a tax haven.”

The panel’s ranking Republican member, Sen. John McCain, added, “Apple claims to be the largest US corporate taxpayer, but by sheer size and scale, it is also among America’s largest tax avoiders.”

More details of the findings were supplied by USA Today:

One of those (Irish based) Apple subsidiaries reported $30 billion in net income for 2009-2012, yet filed no corporate tax return and paid no income taxes to any government during those years, the panel reported in advance of a public hearing set for Tuesday.

Another affiliate received $74 billion in sales income over four years, but paid taxes “on only a tiny fraction of that income,” the report said.

Apple also transferred economic rights for some of its intellectual property to its offshore affiliates in low-tax jurisdictions, saving tens of billions of dollars in levies, the Senate panel concluded in its latest look at corporate tax avoidance tactics.

The company then went a step further by using U.S. tax loopholes to avoid federal taxes on $44 billion in otherwise taxable offshore income from the intellectual property rights during the last four years, the report concluded.

Apple CEO Tim Cook released a statement which he is slated to read before a Senate Committee in a hearing.  In it he defends Apple:

“Apple … employs tens of thousands of Americans, creates revolutionary products that improve the lives of tens of millions of Americans, and pays billions of dollars annually to the US Treasury in corporate income and payroll taxes,” Cook will tell his inquisitors.

“Apple complies fully with both the laws and spirit of the laws,” the statement reads. “And Apple pays all its required taxes, both in this country and abroad.”

That statement goes on to describe Apple as a “powerful engine of job creation in the US,” one that “pays an extraordinary amount in US taxes,” “does not use tax gimmicks,” and is “an American success story.”

Eamon Gilmore, Ireland’s deputy prime minister, rejected his country’s role in the tax avoidance strategy in an interview on Irish radio.  He said of Apple’s tax issues,

They are not issues that arise from the Irish taxation system. They are issues that arise from the taxation system in the other jurisdictions and that is an issue that has to be addressed in those jurisdictions,”

Apple joins Google, Yahoo! and Dell in a group of massive tech companies whose European tax havens have been unearthed. The loopholes in the U.S. tax system must be closed in order to bring these companies into proper compliance.  Senators Levin and McCain verbalized the need for Congress to expedite the process of closing these loopholes instead of waiting for a comprehensive tax code overhaul.

RIGHT NOW: Offshore Profit Shifting and the US Tax Code Hearings (LIVE VIDEO)

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