Apple’s tax avoidance scheme remains as creative as their new iPhone

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This article was written by one of our passionate readers, Mrs Rachel Everly. The opinions expressed within reflect only the writer’s views and not The European Sting’s position on the issue.

The annual report released by Apple is hinting very strongly that they are continuing to earn good profits, which are unfortunately being funneled offshore to avoid U.S. taxes on a scale unmatched by any other company. Second, even after the EU declaring openly that Apple has been using its Irish subsidiary for illegal tax avoidance, Apple has not admitted to any wrongdoing.

Besides its disputed USD 29 billion in offshore cash, Apple has amassed up to USD 216 billion in funds on which it has hardly paid a 4% tax rate. This means that it has evaded up to USD 67 billion in U.S. taxes. The company is fighting tooth and nail in order to avoid paying any taxes to any government on its so-called Irish taxes.

However, the European Union has caught on to Apple and they are not going to let them go easy. Government authorities around the world are cracking down on big businesses for the taxes they have so successfully avoided paying. Right now European Union is hounding Apple for taxes into the amount of USD 14.5 billion. The European Union conducted an investigation into the Apple’s affairs and found that they had entered into agreements with the Ireland government through which they had received these illegal tax benefits.

What is the Apple Ireland tax controversy?

Apple in Ireland has tax arrangements in Ireland which have allowed them to pay an ultra-low tax rate of 4%. It was rightly commented that in percentage terms most small businesses like hot-dog vendors end up paying more. This is an issue that is being hotly debated in U.S for most of the profits that Apple earns are said to be earned by their Irish subsidiaries thus helping them evade tax in the U.S. The European Commission is now targeting this arrangement because they say Apple has distorted the competition and gain an unfair edge. They have alleged that such an act amounts to illegal state aid and is a breach of the EU’s unique restrictions on state support to companies.

What is the U.S’s stance of the case?

If Apple is forced to pay back money to the Ireland government that means tax money lost for the U.S. government. The U.S. government is already underfire for letting big corporations get away with what people are calling “day-light” robbery looking at the dismal tax percentages they pay compared to their profits.

Why would the U.S get less tax? Because they will treat this Irish tax as an expense which lowers their profit thus making even less available to be taxed in the U.S. Thus the U.S. is actually taking Apple’s side and has gone to say that the European commission is behaving like “supranational tax authority” and have threatened international tax reform agreements through inquiries. However, this mindset is very detrimental to progress because the EC has gone out its way to point out that a part of the USD 14.5 billion would be awarded to the United States rather than Ireland. The EC is not viewing this as political exercise rather it is going after Apple to set a precedent that all abuse of power by big corporations will eventually be brought under the limelight.

Why should the average “Joe” care?

This is something that should of huge interest to every person. Most individuals end up footing the bill for such corporations by paying higher percentages of tax. Secondly, many students will be entering the workforce and they should be aware of such issues for it will help them decide what route to take after graduation.

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