10 ms·

Apple sells a huge number of physical devices - phones and tablets. They created a new market, and now governments are able to collect VAT and sometimes customs

Apple sells a huge number of physical devices - phones and tablets. They created a new market, and now governments are able to collect VAT and sometimes customs tariffs on all those smartphones. Why not let Apple have what's left?

coldtea 11y ago
>Why not let Apple have what's left? Because other businesses also create products that collect VAT and still pay their taxes. Why should Apple be any different? To promote those that are big enough to avoid taxation to make them even bigger?
- newjersey 11y ago
  Apple pays VAT and all the taxes it is legally obliged to pay. Don't blame Apple. They will pay the least amount they have to pay. Fix the loopholes.
  - baldfat 11y ago
    100% Right fix the laws. This is horrible and the Rich pay round 10% tax rate (They argue they pay so much? They pay a ton in taxes but in terms of percentage they pay less than most people) Th
  - kmkemp 11y ago
    Except that the reason the loopholes exist is because of the lobbying of companies that take advantage of them.
    - caskance 11y ago
      The fact that companies are able to create loopholes via lobbying is the problem. When you accept corrupt government as an unchangeable fact of nature, you've already conceded defeat.
      - saiya-jin 11y ago
        or... you might become a realist, and maybe try to come up with solutions applicable in real world, on real people and real situations. I'm not claiming I know what the solutions are. But I am damn sure theoretical solutions for theoretical situations tend to fail spectacularly in reality, no matter what topic they are about.
        caskance 11y ago
        You could support Lawrence Lessig's presidential campaign.
        tptacek 11y ago
        I think you missed the part of parent comment about "realism".
        caskance 11y ago
        Lawrence Lessig is a real person and thus my answer satisfies at least one of the criteria given.
      - tsotha 11y ago
        100% agree, and this has been very frustrating for me over the last decade or so. Elected reps (in the US, at least) are barely going through the motions of obscuring the quid pro quo any more, and it seems like nobody really cares.
    - crazy1van 11y ago
      How can this loophole get fixed? My (admittedly minimal) understanding is that these companies don't have to pay taxes on the money until they repatriate it. From the perspective of countries like the US or UK, Apple earns very little in "profits" because they have expenses in licensing fees between their own companies that effectively pushes the profit to countries with very low corporate tax rates. This all sounds sinister and it certainly is clever. But I don't see an easy way to fix it. I don't think a tax system where countries can tax profit that never enters its borders is viable. How would the UK feel if the Cayman Islands levied a tax on profit earned by UK companies?
      - newjersey 11y ago
        a very heavy handed approach that will almost certainly fail in the real world would be to tax corporate revenue, not profit. This is VERY invasive and I would not recommend it at all but I don't see an approach that is simple enough like this that does not require international co-operation. In my simple mind, the failure is in defining profits. How do we define profit? The devil is probably in the details. * If Wally's world buys widgets for $6B and sells them for $10B but then turns around and spends $5B on long term infrastructure, did they make a profit? Do they owe any taxes? Something closer to home: Once we get into the details, it is very easy to get lost in there. When they spend $100 per hour to hire a consultant (programmer), does that count as capital expenditure? How? I am not a lawyer and I am definitely not an accountant. I would imagine loopholes can be closed but it requires technical expertise that I lack. * Perhaps only allow cross-border expenses to countries that honor a certain level of agreement? PS: I am not so sure about taxing income in other countries. None of what I say applies to expatriating money from overseas. It only applies to monies a company makes in our country and tries to ship overseas. If Apple sells $100B worth of iPhones in the UK, should they pay corporate income tax on it in the US? Why not pay corporate tax on that in the UK?
        triangleman 11y ago
        How is taxing revenue more invasive than taxing profit? In the former scenario you have half as many things to audit than in the latter.
  - coldtea 11y ago
    The loopholes exist because corporations like Apple (but even more so others), lobby for them to exist. It's not like corporations are exploiting some totally neutral loophole they discovered -- those are there on purpose.
    - znq 11y ago
      Not trying to deny what you say is true, but just out of curiosity, is there any proof that Apple is doing this and how do implementations of this lobbyism look like? Just trying to understand how all this works.
      - coldtea 11y ago
        Maybe it's because of coming from a European background, but this kind of questions are quite baffling for me. I know you mean well, but I find that the idea that corporations do this kind of thing doesn't need any more proof than the fact that the earth is round. If one follows the news, there are constant reminders of this kind of lobbying going on (corporations asking for special treatment, especially when it comes to taxes) for a whole century. Besides a lot of this is done right out in the open. I mean coorporate lobbying was invented exactly for that -- to push governments for favorable laws, special treatment, laxer environmental and other protections, etc. On top of that, there are all kinds of under-the-table deals (with lots of them exposed frequently) with politicians and corporations. That said, here are some pointers to the issue. First the general Wikipedia article: A number of published studies showed lobbying expenditures can yield great financial returns. For example, a study of the 50 firms that spent the most on lobbying relative to their assets compared their financial performance against that of the S&P 500 in the stock market concluded that spending on lobbying was a "spectacular investment" yielding "blistering" returns comparable to a high-flying hedge fund, even despite the financial downturn of the past few years. A 2011 meta-analysis of previous research findings found a positive correlation between corporate political activity and firm performance. Finally, a 2009 study found that lobbying brought a substantial return on investment, as much as 22,000% in some cases. https://en.wikipedia.org/wiki/Lobbying#United_States https://en.wikipedia.org/wiki/Lobbying#United_States And the US specific one: https://en.wikipedia.org/wiki/Lobbying_in_the_United_States https://en.wikipedia.org/wiki/Lobbying_in_the_United_States The Atlantic: http://www.theatlantic.com/business/archive/2015/04/how-corporate-lobbyists-conquered-american-democracy/390822/ http://www.theatlantic.com/business/archive/2015/04/how-corp... The Guardian: http://www.theguardian.com/politics/2014/mar/12/lobbying-10-ways-corprations-influence-government http://www.theguardian.com/politics/2014/mar/12/lobbying-10-... National Review: http://www.nationalreview.com/article/421664/corporate-lobbying-ultimate-tragedy-commons-lee-drutman http://www.nationalreview.com/article/421664/corporate-lobby... Fortune: http://fortune.com/2015/09/04/lobbying-corporate-washington/ http://fortune.com/2015/09/04/lobbying-corporate-washington/ Economist: http://www.economist.com/node/21553020 http://www.economist.com/node/21553020 Forbes: http://www.forbes.com/sites/chrisbarth/2011/12/14/29-companies-that-paid-millions-for-lobbying-and-didnt-pay-taxes/ http://www.forbes.com/sites/chrisbarth/2011/12/14/29-compani... Oxford University Press: http://www.amazon.com/The-Business-America-Lobbying-Corporations/dp/0190215518 http://www.amazon.com/The-Business-America-Lobbying-Corporat... Lawrence Lessig: http://www.amazon.com/Republic-Lost-Money-Corrupts-Congress/dp/0446576441/ref=pd_sim_14_1?ie=UTF8&refRID=1Q2E4G4AYHVT5C8QP7J0&dpID=51kKHuyAQmL&dpSrc=sims&preST=_AC_UL160_SR105%2C160_ http://www.amazon.com/Republic-Lost-Money-Corrupts-Congress/... The Influence Machine: The Influence Machine: The U.S. Chamber of Commerce and the Corporate Capture of American Life Lobbying America: http://www.amazon.com/Lobbying-America-Politics-Business-Twentieth-Century/dp/069114916X/ref=pd_sim_14_12?ie=UTF8&refRID=1Q2E4G4AYHVT5C8QP7J0 http://www.amazon.com/Lobbying-America-Politics-Business-Twe... And those are "establishment" sources -- you'd get far better coverage in more outspoken and critical voices. Regarding Apple in particular: http://www.theguardian.com/business/2015/jan/21/us-tech-tax-avoidance-google-amazon-apple http://www.theguardian.com/business/2015/jan/21/us-tech-tax-... http://www.theguardian.com/technology/2014/sep/30/apple-repay-millions-irish-government-tax-deal http://www.theguardian.com/technology/2014/sep/30/apple-repa...
  - SixSigma 11y ago
    The UK tax office has been trying to fix loopholes.since transfer pricing abuse and offshore trusts started in the 19thC. Non-dom has taken about 100 years to be scrapped which was creatively spawned by the Vesteys http://www.theguardian.com/uk-news/2015/jul/08/non-dom-tax-status-abolished-individuals-born-uk-budget-george-osborne http://www.theguardian.com/uk-news/2015/jul/08/non-dom-tax-s...
  - SixSigma 11y ago
    The UK tax office has been trying to fix loopholes.since transfer pricing abuse and offshore trusts started in the 19thC. Non-dom has taken about 100 years to be scrapped which was creatively spawned by the Vesteys http://www.theguardian.com/uk-news/2015/jul/08/non-dom-tax-status-abolished-individuals-born-uk-budget-george-osborne http://www.theguardian.com/uk-news/2015/jul/08/non-dom-tax-s...
  - desas 11y ago
    VAT is a tax paid by end consumers, its just collected by retailers.
- marrs 11y ago
  But Apple are paying their taxes.
  - coldtea 11y ago
    No, they use every trick in the book not to, ending up paying less than your local frozen yogurt place (exaggerating a little, but still).
    - geodel 11y ago
      So the problem is existence of the book of tricks. Apple did not write it.
      - throwaway2048 11y ago
        except apple (and companies like it) very much do "write the book" via lobbying.
      - saiya-jin 11y ago
        general principle was there before apple. but for sure they do cook a 'book' or two, as one of the most wealthy companies in the world, without any strong sense of morality (not saying lack of it, just usual corporation as many others). If you can invest for example 500 millions USD in bribes to gain 5 billions per year in not paying taxes, that's a damn easy decision for some CEO. And those fictional 500 millions will get you quite far in these times, where lobbyists in capital cities in both EU and US are not even illegal (in my opinion should be shot in sight), but just part of daily life.
      - Marazan 11y ago
        Yes they did. they literally negotiated a deal with the Irish government to get the tax structure they wanted for their European operations.
    - fredoliveira 11y ago
      See but they do pay their taxes. They just use loopholes to pay less taxes.
adaml_623 11y ago
Because we have quadriplegics who need 24 hour care so they don't die. Just to choose one random example of why we choose to have a government that levies taxes and provides services.
- guard-of-terra 11y ago
  Why not finance helping quadriplegics from increased VAT? If it comes to that, why not finance helping quadriplegics from charity?
  - bitJericho 11y ago
    In the US we already have charities and they're not really taxed and if you donate to those charities, the money you donate is (generally) not taxed.
  - JupiterMoon 11y ago
    Why not charity? Because then the people donating to charity will (at least try to) impose conditions. So only quadriplegics or a certain faith or with a certain set of circumstances with receive help. (See e.g. the concepts of the deserving/undeserving poor and moral judgements with charities helping the poor in the UK pre-1945.)
    - deleted 11y ago
      [deleted]
  - byroot 11y ago
    > Why not finance helping quadriplegics from increased VAT? Because VAT, beside being a very effective tax (it's the biggest source of income of most countries), is the most unfair one. Say a country have a 20% VAT Low income household need to use the entirety of their income to survive (food, housing, etc). So effectively 20% of their income is collected as VAT. Now a upper class household, let's say they save 25% of their income each month as retirement plans etc, and spend the rest. They've been effectively taxed at 20% of 75% of they income, so their effective VAT rate was 15%. While you often see very high income people advocate for flat rate tax instead of progressive tax, none of them have the nerve to propose a reversed progressive tax like VAT is, where poor people pay proportionally more than rich people.

coldtea 11y ago

>Why not let Apple have what's left? Because other businesses also create products that collect VAT and still pay their taxes. Why should Apple be any different? To promote those that are big enough to avoid taxation to make them even bigger?

newjersey 11y ago
Apple pays VAT and all the taxes it is legally obliged to pay. Don't blame Apple. They will pay the least amount they have to pay. Fix the loopholes.
- baldfat 11y ago
  100% Right fix the laws. This is horrible and the Rich pay round 10% tax rate (They argue they pay so much? They pay a ton in taxes but in terms of percentage they pay less than most people) Th
- kmkemp 11y ago
  Except that the reason the loopholes exist is because of the lobbying of companies that take advantage of them.
  - caskance 11y ago
    The fact that companies are able to create loopholes via lobbying is the problem. When you accept corrupt government as an unchangeable fact of nature, you've already conceded defeat.
    - saiya-jin 11y ago
      or... you might become a realist, and maybe try to come up with solutions applicable in real world, on real people and real situations. I'm not claiming I know what the solutions are. But I am damn sure theoretical solutions for theoretical situations tend to fail spectacularly in reality, no matter what topic they are about.
      - caskance 11y ago
        You could support Lawrence Lessig's presidential campaign.
        tptacek 11y ago
        I think you missed the part of parent comment about "realism".
        caskance 11y ago
        Lawrence Lessig is a real person and thus my answer satisfies at least one of the criteria given.
    - tsotha 11y ago
      100% agree, and this has been very frustrating for me over the last decade or so. Elected reps (in the US, at least) are barely going through the motions of obscuring the quid pro quo any more, and it seems like nobody really cares.
  - crazy1van 11y ago
    How can this loophole get fixed? My (admittedly minimal) understanding is that these companies don't have to pay taxes on the money until they repatriate it. From the perspective of countries like the US or UK, Apple earns very little in "profits" because they have expenses in licensing fees between their own companies that effectively pushes the profit to countries with very low corporate tax rates. This all sounds sinister and it certainly is clever. But I don't see an easy way to fix it. I don't think a tax system where countries can tax profit that never enters its borders is viable. How would the UK feel if the Cayman Islands levied a tax on profit earned by UK companies?
    - newjersey 11y ago
      a very heavy handed approach that will almost certainly fail in the real world would be to tax corporate revenue, not profit. This is VERY invasive and I would not recommend it at all but I don't see an approach that is simple enough like this that does not require international co-operation. In my simple mind, the failure is in defining profits. How do we define profit? The devil is probably in the details. * If Wally's world buys widgets for $6B and sells them for $10B but then turns around and spends $5B on long term infrastructure, did they make a profit? Do they owe any taxes? Something closer to home: Once we get into the details, it is very easy to get lost in there. When they spend $100 per hour to hire a consultant (programmer), does that count as capital expenditure? How? I am not a lawyer and I am definitely not an accountant. I would imagine loopholes can be closed but it requires technical expertise that I lack. * Perhaps only allow cross-border expenses to countries that honor a certain level of agreement? PS: I am not so sure about taxing income in other countries. None of what I say applies to expatriating money from overseas. It only applies to monies a company makes in our country and tries to ship overseas. If Apple sells $100B worth of iPhones in the UK, should they pay corporate income tax on it in the US? Why not pay corporate tax on that in the UK?
      - triangleman 11y ago
        How is taxing revenue more invasive than taxing profit? In the former scenario you have half as many things to audit than in the latter.
- coldtea 11y ago
  The loopholes exist because corporations like Apple (but even more so others), lobby for them to exist. It's not like corporations are exploiting some totally neutral loophole they discovered -- those are there on purpose.
  - znq 11y ago
    Not trying to deny what you say is true, but just out of curiosity, is there any proof that Apple is doing this and how do implementations of this lobbyism look like? Just trying to understand how all this works.
    - coldtea 11y ago
      Maybe it's because of coming from a European background, but this kind of questions are quite baffling for me. I know you mean well, but I find that the idea that corporations do this kind of thing doesn't need any more proof than the fact that the earth is round. If one follows the news, there are constant reminders of this kind of lobbying going on (corporations asking for special treatment, especially when it comes to taxes) for a whole century. Besides a lot of this is done right out in the open. I mean coorporate lobbying was invented exactly for that -- to push governments for favorable laws, special treatment, laxer environmental and other protections, etc. On top of that, there are all kinds of under-the-table deals (with lots of them exposed frequently) with politicians and corporations. That said, here are some pointers to the issue. First the general Wikipedia article: A number of published studies showed lobbying expenditures can yield great financial returns. For example, a study of the 50 firms that spent the most on lobbying relative to their assets compared their financial performance against that of the S&P 500 in the stock market concluded that spending on lobbying was a "spectacular investment" yielding "blistering" returns comparable to a high-flying hedge fund, even despite the financial downturn of the past few years. A 2011 meta-analysis of previous research findings found a positive correlation between corporate political activity and firm performance. Finally, a 2009 study found that lobbying brought a substantial return on investment, as much as 22,000% in some cases. https://en.wikipedia.org/wiki/Lobbying#United_States https://en.wikipedia.org/wiki/Lobbying#United_States And the US specific one: https://en.wikipedia.org/wiki/Lobbying_in_the_United_States https://en.wikipedia.org/wiki/Lobbying_in_the_United_States The Atlantic: http://www.theatlantic.com/business/archive/2015/04/how-corporate-lobbyists-conquered-american-democracy/390822/ http://www.theatlantic.com/business/archive/2015/04/how-corp... The Guardian: http://www.theguardian.com/politics/2014/mar/12/lobbying-10-ways-corprations-influence-government http://www.theguardian.com/politics/2014/mar/12/lobbying-10-... National Review: http://www.nationalreview.com/article/421664/corporate-lobbying-ultimate-tragedy-commons-lee-drutman http://www.nationalreview.com/article/421664/corporate-lobby... Fortune: http://fortune.com/2015/09/04/lobbying-corporate-washington/ http://fortune.com/2015/09/04/lobbying-corporate-washington/ Economist: http://www.economist.com/node/21553020 http://www.economist.com/node/21553020 Forbes: http://www.forbes.com/sites/chrisbarth/2011/12/14/29-companies-that-paid-millions-for-lobbying-and-didnt-pay-taxes/ http://www.forbes.com/sites/chrisbarth/2011/12/14/29-compani... Oxford University Press: http://www.amazon.com/The-Business-America-Lobbying-Corporations/dp/0190215518 http://www.amazon.com/The-Business-America-Lobbying-Corporat... Lawrence Lessig: http://www.amazon.com/Republic-Lost-Money-Corrupts-Congress/dp/0446576441/ref=pd_sim_14_1?ie=UTF8&refRID=1Q2E4G4AYHVT5C8QP7J0&dpID=51kKHuyAQmL&dpSrc=sims&preST=_AC_UL160_SR105%2C160_ http://www.amazon.com/Republic-Lost-Money-Corrupts-Congress/... The Influence Machine: The Influence Machine: The U.S. Chamber of Commerce and the Corporate Capture of American Life Lobbying America: http://www.amazon.com/Lobbying-America-Politics-Business-Twentieth-Century/dp/069114916X/ref=pd_sim_14_12?ie=UTF8&refRID=1Q2E4G4AYHVT5C8QP7J0 http://www.amazon.com/Lobbying-America-Politics-Business-Twe... And those are "establishment" sources -- you'd get far better coverage in more outspoken and critical voices. Regarding Apple in particular: http://www.theguardian.com/business/2015/jan/21/us-tech-tax-avoidance-google-amazon-apple http://www.theguardian.com/business/2015/jan/21/us-tech-tax-... http://www.theguardian.com/technology/2014/sep/30/apple-repay-millions-irish-government-tax-deal http://www.theguardian.com/technology/2014/sep/30/apple-repa...
- SixSigma 11y ago
  The UK tax office has been trying to fix loopholes.since transfer pricing abuse and offshore trusts started in the 19thC. Non-dom has taken about 100 years to be scrapped which was creatively spawned by the Vesteys http://www.theguardian.com/uk-news/2015/jul/08/non-dom-tax-status-abolished-individuals-born-uk-budget-george-osborne http://www.theguardian.com/uk-news/2015/jul/08/non-dom-tax-s...
- SixSigma 11y ago
  The UK tax office has been trying to fix loopholes.since transfer pricing abuse and offshore trusts started in the 19thC. Non-dom has taken about 100 years to be scrapped which was creatively spawned by the Vesteys http://www.theguardian.com/uk-news/2015/jul/08/non-dom-tax-status-abolished-individuals-born-uk-budget-george-osborne http://www.theguardian.com/uk-news/2015/jul/08/non-dom-tax-s...
- desas 11y ago
  VAT is a tax paid by end consumers, its just collected by retailers.
marrs 11y ago
But Apple are paying their taxes.
- coldtea 11y ago
  No, they use every trick in the book not to, ending up paying less than your local frozen yogurt place (exaggerating a little, but still).
  - geodel 11y ago
    So the problem is existence of the book of tricks. Apple did not write it.
    - throwaway2048 11y ago
      except apple (and companies like it) very much do "write the book" via lobbying.
    - saiya-jin 11y ago
      general principle was there before apple. but for sure they do cook a 'book' or two, as one of the most wealthy companies in the world, without any strong sense of morality (not saying lack of it, just usual corporation as many others). If you can invest for example 500 millions USD in bribes to gain 5 billions per year in not paying taxes, that's a damn easy decision for some CEO. And those fictional 500 millions will get you quite far in these times, where lobbyists in capital cities in both EU and US are not even illegal (in my opinion should be shot in sight), but just part of daily life.
    - Marazan 11y ago
      Yes they did. they literally negotiated a deal with the Irish government to get the tax structure they wanted for their European operations.
  - fredoliveira 11y ago
    See but they do pay their taxes. They just use loopholes to pay less taxes.

adaml_623 11y ago

Because we have quadriplegics who need 24 hour care so they don't die. Just to choose one random example of why we choose to have a government that levies taxes and provides services.

guard-of-terra 11y ago
Why not finance helping quadriplegics from increased VAT? If it comes to that, why not finance helping quadriplegics from charity?
- bitJericho 11y ago
  In the US we already have charities and they're not really taxed and if you donate to those charities, the money you donate is (generally) not taxed.
- JupiterMoon 11y ago
  Why not charity? Because then the people donating to charity will (at least try to) impose conditions. So only quadriplegics or a certain faith or with a certain set of circumstances with receive help. (See e.g. the concepts of the deserving/undeserving poor and moral judgements with charities helping the poor in the UK pre-1945.)
  - deleted 11y ago
    [deleted]
- byroot 11y ago
  > Why not finance helping quadriplegics from increased VAT? Because VAT, beside being a very effective tax (it's the biggest source of income of most countries), is the most unfair one. Say a country have a 20% VAT Low income household need to use the entirety of their income to survive (food, housing, etc). So effectively 20% of their income is collected as VAT. Now a upper class household, let's say they save 25% of their income each month as retirement plans etc, and spend the rest. They've been effectively taxed at 20% of 75% of they income, so their effective VAT rate was 15%. While you often see very high income people advocate for flat rate tax instead of progressive tax, none of them have the nerve to propose a reversed progressive tax like VAT is, where poor people pay proportionally more than rich people.