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Please provide a source for your claim. Everything I've read indicates these tax arrangements are only effective for foreign profits.

gozur88 11y ago
Would it be too much to ask that people looked at the wiki page before they demanded sources? The page for Double Irish mentions Apple by name.
- nodamage 11y ago
  Wow, thanks for your incredibly condescending reply. Let's look at the actual Wikipedia page for the Double Irish arrangement: "The offshore company continues to receive all of the profits from exploitation of the rights outside the US, but without paying US tax on the profits unless and until they are remitted to the US." https://en.wikipedia.org/wiki/Double_Irish_arrangement https://en.wikipedia.org/wiki/Double_Irish_arrangement "However, tax experts say that strategies like the Double Irish help explain how Apple has managed to keep its international taxes to 3.2 percent of foreign profits last year, to 2.2 percent in 2010, and in the single digits for the last half-decade, according to the company’s corporate filings." http://www.nytimes.com/2012/04/29/business/apples-tax-strategy-aims-at-low-tax-states-and-nations.html http://www.nytimes.com/2012/04/29/business/apples-tax-strate... "Under a typical “Double Irish” structure, a U.S. parent company (USCo) forms two Irish subsidiaries, IrishCo1 and IrishCo2. IrishCo1 is a first-tier Irish subsidiary organized under Irish law but managed and controlled in a low-tax jurisdiction (e.g., Bermuda or the British Virgin Islands). While U.S. rules determine tax residency of a corporation based on its place of incorporation, Irish law often determines tax residency based on the country where the company is managed and controlled. Accordingly, IrishCo1 will be treated for U.S. tax purposes as an Irish corporation, but for Irish tax purposes generally will be structured so as to be treated as a nonresident of Ireland resident in, for example, Bermuda. USCo will retain all US rights in the relevant IP and will license to IrishCo1 the rights to develop and exploit the IP outside the US. IrishCo1 will then sublicense these IP rights to IrishCo2, which in turn will use the IP to manufacture/produce IP products and then sell those products to customers outside the U.S." http://www.taxeswithoutbordersblog.com/2014/10/death-of-the-double-irish-dutch-sandwich-not-so-fast/ http://www.taxeswithoutbordersblog.com/2014/10/death-of-the-... You clearly do not understand how the double Irish arrangement actually works or what taxes it is supposed to reduce. Hint: if Apple could wipe out their US income tax obligations so easily using this arrangement, they probably wouldn't have bothered to pay that $14 billion in corporate income tax last year.
  - gozur88 11y ago
    You're missing the implications. How much foreign business did Apple do in the 1980s? Look here: http://graphics8.nytimes.com/packages/pdf/business/MemoOnOffshoreProfitShiftingAndApple.pdf http://graphics8.nytimes.com/packages/pdf/business/MemoOnOff... >The Apple case study examines how Apple Inc., a U.S. corporation, has used a variety of offshore structures, arrangements, and transactions to shift billions of dollars in profits away from the United States and into Ireland, where Apple has negotiated a special corporate tax rate of less than 2%. One of Apple’s more unusual tactics has been to establish and direct substantial funds to offshore entities that are not declared tax residents of any jurisdiction. In 1980, Apple created Apple Operations International, which acts as its primary offshore holding company but has not declared tax residency in any jurisdiction. Despite reporting net income of $30 billion over the four-year period 2009 to 2012, Apple Operations International paid no corporate income taxes to any national government during that period. Similarly, Apple Sales International, a second Irish affiliate, is the repository for Apple’s offshore intellectual property rights and the recipient of substantial income related to Apple worldwide sales, yet claims to be a tax resident nowhere and may be causing that income to go untaxed. That's not some guy in his pajamas, there. It's a Senate report. For most US companies the whole point of the lowered Irish tax rate is to pay that on profits you've moved offshore. And while most of Apple's profit would probably still come from other markets if it weren't playing these kinds of offset pricing games, Apple has moved billions of dollars in profits out of the US to avoid taxes. It's not just Apple, either. This is why the effective US tax rate for corporations is 12.6% even as the statutory rate is 35%. I suspect that figure would be a lot lower, too, if only multinationals were considered. This is the elephant in the tax tent: The IRS has wide latitude when determining what's reasonable for companies to charge subsidiaries for goods and services (and vice versa). But it's easy to arbitrarily complicate these kinds of arrangements. And it's pretty subjective to start with - how much should Apple pay Apple Sales International to use a patent that nobody else is licensing? How would you even determine the fair market value? There are rules, of course, but even assuming there's no undue influence by corporations (and you can't assume that), imagine writing a set of rules that covers every conceivable business arrangement between multinationals that doesn't leave any grey area. Can't be done.
    - 11y ago

gozur88 11y ago

Would it be too much to ask that people looked at the wiki page before they demanded sources? The page for Double Irish mentions Apple by name.

nodamage 11y ago
Wow, thanks for your incredibly condescending reply. Let's look at the actual Wikipedia page for the Double Irish arrangement: "The offshore company continues to receive all of the profits from exploitation of the rights outside the US, but without paying US tax on the profits unless and until they are remitted to the US." https://en.wikipedia.org/wiki/Double_Irish_arrangement https://en.wikipedia.org/wiki/Double_Irish_arrangement "However, tax experts say that strategies like the Double Irish help explain how Apple has managed to keep its international taxes to 3.2 percent of foreign profits last year, to 2.2 percent in 2010, and in the single digits for the last half-decade, according to the company’s corporate filings." http://www.nytimes.com/2012/04/29/business/apples-tax-strategy-aims-at-low-tax-states-and-nations.html http://www.nytimes.com/2012/04/29/business/apples-tax-strate... "Under a typical “Double Irish” structure, a U.S. parent company (USCo) forms two Irish subsidiaries, IrishCo1 and IrishCo2. IrishCo1 is a first-tier Irish subsidiary organized under Irish law but managed and controlled in a low-tax jurisdiction (e.g., Bermuda or the British Virgin Islands). While U.S. rules determine tax residency of a corporation based on its place of incorporation, Irish law often determines tax residency based on the country where the company is managed and controlled. Accordingly, IrishCo1 will be treated for U.S. tax purposes as an Irish corporation, but for Irish tax purposes generally will be structured so as to be treated as a nonresident of Ireland resident in, for example, Bermuda. USCo will retain all US rights in the relevant IP and will license to IrishCo1 the rights to develop and exploit the IP outside the US. IrishCo1 will then sublicense these IP rights to IrishCo2, which in turn will use the IP to manufacture/produce IP products and then sell those products to customers outside the U.S." http://www.taxeswithoutbordersblog.com/2014/10/death-of-the-double-irish-dutch-sandwich-not-so-fast/ http://www.taxeswithoutbordersblog.com/2014/10/death-of-the-... You clearly do not understand how the double Irish arrangement actually works or what taxes it is supposed to reduce. Hint: if Apple could wipe out their US income tax obligations so easily using this arrangement, they probably wouldn't have bothered to pay that $14 billion in corporate income tax last year.
- gozur88 11y ago
  You're missing the implications. How much foreign business did Apple do in the 1980s? Look here: http://graphics8.nytimes.com/packages/pdf/business/MemoOnOffshoreProfitShiftingAndApple.pdf http://graphics8.nytimes.com/packages/pdf/business/MemoOnOff... >The Apple case study examines how Apple Inc., a U.S. corporation, has used a variety of offshore structures, arrangements, and transactions to shift billions of dollars in profits away from the United States and into Ireland, where Apple has negotiated a special corporate tax rate of less than 2%. One of Apple’s more unusual tactics has been to establish and direct substantial funds to offshore entities that are not declared tax residents of any jurisdiction. In 1980, Apple created Apple Operations International, which acts as its primary offshore holding company but has not declared tax residency in any jurisdiction. Despite reporting net income of $30 billion over the four-year period 2009 to 2012, Apple Operations International paid no corporate income taxes to any national government during that period. Similarly, Apple Sales International, a second Irish affiliate, is the repository for Apple’s offshore intellectual property rights and the recipient of substantial income related to Apple worldwide sales, yet claims to be a tax resident nowhere and may be causing that income to go untaxed. That's not some guy in his pajamas, there. It's a Senate report. For most US companies the whole point of the lowered Irish tax rate is to pay that on profits you've moved offshore. And while most of Apple's profit would probably still come from other markets if it weren't playing these kinds of offset pricing games, Apple has moved billions of dollars in profits out of the US to avoid taxes. It's not just Apple, either. This is why the effective US tax rate for corporations is 12.6% even as the statutory rate is 35%. I suspect that figure would be a lot lower, too, if only multinationals were considered. This is the elephant in the tax tent: The IRS has wide latitude when determining what's reasonable for companies to charge subsidiaries for goods and services (and vice versa). But it's easy to arbitrarily complicate these kinds of arrangements. And it's pretty subjective to start with - how much should Apple pay Apple Sales International to use a patent that nobody else is licensing? How would you even determine the fair market value? There are rules, of course, but even assuming there's no undue influence by corporations (and you can't assume that), imagine writing a set of rules that covers every conceivable business arrangement between multinationals that doesn't leave any grey area. Can't be done.
  - 11y ago