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Apple is doing the right thing by paying this to Italy. Next up (I hope) is a similar agreement regarding Apple, the U.S., and Ireland. The primary goal is to

by jph 11y ago

Apple is doing the right thing by paying this to Italy. Next up (I hope) is a similar agreement regarding Apple, the U.S., and Ireland. The primary goal is to get Apple to pay each U.S. taxes on U.S. sales: when Apple sells an iPhone in the U.S, the profit should be realized in the U.S, not in Ireland in a Irish shell company. Then do the same for all other countries, so Apple pays fair taxes on fair profits to the right countries. Forbes has a good introduction: http://www.forbes.com/sites/leesheppard/2013/05/28/how-does-apple-avoid-taxes/ http://www.forbes.com/sites/leesheppard/2013/05/28/how-does-...

ryanwaggoner 11y ago
The primary goal is to get Apple to pay U.S. taxes on U.S. sales. The linked Forbes article is a great introduction, but unless I'm reading it wrong, it covers how Apple avoids US taxes on foreign sales, not US taxes on US sales. How exactly are they avoiding US taxes on US sales? The US practice of taxing entities (corporations and people) on their global income based on citizenship instead of residency is just stupid, so Apple is in the legal and moral right here in my view.
- bryanlarsen 11y ago
  There are two distinct outrages here: - Apple avoiding paying taxes on foreign income to the USA - Apple avoiding paying European taxes to anybody Your argument holds weight on the former. However, it obfuscates the second, where Apple pays taxes on its European income at a rate of 0% to Ireland. That's a true outrage.
  - ryanwaggoner 11y ago
    On the latter, isn't that how the EU is supposed to work? I can base my company in an EU country of my choice and not have to pay income taxes for sales in the other EU countries? Similar to basing a company in a US state without corporate income tax, and not owing income tax on sales made in other states. Though the difference is that Federal taxes in the US are much larger than state taxes, while there isn't a broad EU corporate income tax, is there?
    - Marazan 11y ago
      No, the point is not that European sales are taxed in Ireland, it is that they are not taxed at all.This is special treatment Apple got by cutting a deal with the Irish authorities
      - ryanwaggoner 11y ago
        Actually, I don't get the feeling that a single person in this discussion is upset on behalf of Ireland's tax revenues. Why shouldn't a sovereign nation get to decide that they'd rather have Apple HQ there for other reasons and forego some or all of the tax revenue? Tax incentives to lure businesses are common and reasonable.
        Marazan 11y ago
        Because their actions are neither fair to other businesses ( Apple's tax emeption was an individually negotiated deal) nor other EU countries as the income is not taxed at all.
  - digbyloftus 11y ago
    Didn't the rest of the EU agree to that when they let Ireland have the tax code that it does and still be part of the EU? It doesn't seem outrageous to me at all. Stupid on their part maybe, but they're the ones that write the tax codes. They wrote books on who needs to be paid what to be able to sell in the EU, handed them to Apple, Apple read them, and then has gone about abiding by them. Apple doesn't write the rules. It's ridiculous to criticise them for them.
  - paulddraper 11y ago
    Maybe so, but the outrage for 0% should be had towards the people who made a 0% tax rate: the EU/Ireland. Being outraged at Apple is like being outraged at the weatherman about the weather.
- cosmie 11y ago
  Due to the way they leverage their foreign subsidiaries, they're able to play accounting games that drastically lower the perceived (and taxable) profit of those US sales. Such as this mentioned at [1]: "ASI [an Irish Apple subsidiary] buys Apple products from a Chinese manufacturer, resells them at a “substantial” markup to other Apple affiliates and retains the profits, the report said." [1] http://www.macworld.com/article/2039299/senate-report-apple-claims-subsidiaries-with-no-taxing-jurisdiction.html http://www.macworld.com/article/2039299/senate-report-apple-... Not that they're the only ones to play this game. A FMCG company I'm familiar with does something similar by having billions in raw and finished good materials owned by a Switzerland-based subsidiary for tax purposes.
  - landryraccoon 11y ago
    What you're claiming is that Apple is engaging in Transfer Pricing (https://en.wikipedia.org/wiki/Transfer_pricing https://en.wikipedia.org/wiki/Transfer_pricing) which is blatantly and totally illegal. If that is in fact the case, then no laws need to be changed and everyone at Apple who knew about this should be subject to criminal prosecution. The article you posted however gives no evidence that Apple is actually engaging in such practices, or I assume they would already be under criminal investigation. The closest thing in the article you cited is grandstanding by members of congress. (Who aren't even being serious, Congress could easily fine or stop Apple if they actually wanted to do anything).
    - a3camero 11y ago
      Transfer pricing is not illegal. It's often an element of illegal schemes to reduce tax but the act of setting prices between non-arms-length companies is not illegal. It's necessary. The prices just have to be what an arms-length company would pay.
  - nodamage 11y ago
    That article appears to be discussing Apple's avoidance of taxes on non-US sales: "By running nearly all its non-U.S. sales through the Irish subsidiaries, Apple also avoids paying taxes on sales in other countries, including the U.K., Germany and France, the report said." From what I can tell, this 'double Irish' arrangement does not apply to US sales. Edit: Neither the Forbes article nor the Macworld article are discussing US sales, only worldwide sales.

by jph 11y ago

ryanwaggoner 11y ago

The primary goal is to get Apple to pay U.S. taxes on U.S. sales. The linked Forbes article is a great introduction, but unless I'm reading it wrong, it covers how Apple avoids US taxes on foreign sales, not US taxes on US sales. How exactly are they avoiding US taxes on US sales? The US practice of taxing entities (corporations and people) on their global income based on citizenship instead of residency is just stupid, so Apple is in the legal and moral right here in my view.

bryanlarsen 11y ago
There are two distinct outrages here: - Apple avoiding paying taxes on foreign income to the USA - Apple avoiding paying European taxes to anybody Your argument holds weight on the former. However, it obfuscates the second, where Apple pays taxes on its European income at a rate of 0% to Ireland. That's a true outrage.
- ryanwaggoner 11y ago
  On the latter, isn't that how the EU is supposed to work? I can base my company in an EU country of my choice and not have to pay income taxes for sales in the other EU countries? Similar to basing a company in a US state without corporate income tax, and not owing income tax on sales made in other states. Though the difference is that Federal taxes in the US are much larger than state taxes, while there isn't a broad EU corporate income tax, is there?
  - Marazan 11y ago
    No, the point is not that European sales are taxed in Ireland, it is that they are not taxed at all.This is special treatment Apple got by cutting a deal with the Irish authorities
    - ryanwaggoner 11y ago
      Actually, I don't get the feeling that a single person in this discussion is upset on behalf of Ireland's tax revenues. Why shouldn't a sovereign nation get to decide that they'd rather have Apple HQ there for other reasons and forego some or all of the tax revenue? Tax incentives to lure businesses are common and reasonable.
      - Marazan 11y ago
        Because their actions are neither fair to other businesses ( Apple's tax emeption was an individually negotiated deal) nor other EU countries as the income is not taxed at all.
- digbyloftus 11y ago
  Didn't the rest of the EU agree to that when they let Ireland have the tax code that it does and still be part of the EU? It doesn't seem outrageous to me at all. Stupid on their part maybe, but they're the ones that write the tax codes. They wrote books on who needs to be paid what to be able to sell in the EU, handed them to Apple, Apple read them, and then has gone about abiding by them. Apple doesn't write the rules. It's ridiculous to criticise them for them.
- paulddraper 11y ago
  Maybe so, but the outrage for 0% should be had towards the people who made a 0% tax rate: the EU/Ireland. Being outraged at Apple is like being outraged at the weatherman about the weather.
cosmie 11y ago
Due to the way they leverage their foreign subsidiaries, they're able to play accounting games that drastically lower the perceived (and taxable) profit of those US sales. Such as this mentioned at [1]: "ASI [an Irish Apple subsidiary] buys Apple products from a Chinese manufacturer, resells them at a “substantial” markup to other Apple affiliates and retains the profits, the report said." [1] http://www.macworld.com/article/2039299/senate-report-apple-claims-subsidiaries-with-no-taxing-jurisdiction.html http://www.macworld.com/article/2039299/senate-report-apple-... Not that they're the only ones to play this game. A FMCG company I'm familiar with does something similar by having billions in raw and finished good materials owned by a Switzerland-based subsidiary for tax purposes.
- landryraccoon 11y ago
  What you're claiming is that Apple is engaging in Transfer Pricing (https://en.wikipedia.org/wiki/Transfer_pricing https://en.wikipedia.org/wiki/Transfer_pricing) which is blatantly and totally illegal. If that is in fact the case, then no laws need to be changed and everyone at Apple who knew about this should be subject to criminal prosecution. The article you posted however gives no evidence that Apple is actually engaging in such practices, or I assume they would already be under criminal investigation. The closest thing in the article you cited is grandstanding by members of congress. (Who aren't even being serious, Congress could easily fine or stop Apple if they actually wanted to do anything).
  - a3camero 11y ago
    Transfer pricing is not illegal. It's often an element of illegal schemes to reduce tax but the act of setting prices between non-arms-length companies is not illegal. It's necessary. The prices just have to be what an arms-length company would pay.
- nodamage 11y ago
  That article appears to be discussing Apple's avoidance of taxes on non-US sales: "By running nearly all its non-U.S. sales through the Irish subsidiaries, Apple also avoids paying taxes on sales in other countries, including the U.K., Germany and France, the report said." From what I can tell, this 'double Irish' arrangement does not apply to US sales. Edit: Neither the Forbes article nor the Macworld article are discussing US sales, only worldwide sales.