17 ms·

Apple Agrees to Deal with Ireland Over $15B Unpaid Tax Issue

171 points by antr 9y ago

dirkdk 9y ago
Finally! I love Apple but taxes should be paid. There is a difference between legal and ethical and US companies should begin to understand that. So hopefully others will follow suit.
- adamnemecek 9y ago
  The tax system needs to be fixed.
  - stochastic_monk 9y ago
    It's going to need a lot more fixing after the disaster that happened this past week in US Congress.
    - adventured 9y ago
      US corporations will finally be more competitive on their effective income tax rates, with such nations as: Britain, Ireland, Sweden, Norway, Finland, Canada, China, Switzerland, Czech, Taiwan, Egypt, Estonia, Iceland, Israel, Italy, South Korea, the Netherlands, Turkey, Portugal, Romania, Russia, Singapore, Spain, Vietnam, Thailand and so on. All of those nations have significantly lower effective rates.
      - stochastic_monk 9y ago
        That's not accurate. Considering the enormous loopholes, corporations in the US actually pay something comparable to these other developed countries. The average company pays something between 12% [1] and 22% [2] -- much less than the ostensible tax rate. (See also [3,4].) Now we have nearly all the same loopholes and a lower base rate: a simple recipe for disaster. [1] http://money.cnn.com/2013/07/01/news/economy/corporate-tax-rate/index.html http://money.cnn.com/2013/07/01/news/economy/corporate-tax-r... [2] https://www.nytimes.com/2017/03/09/business/economy/corporate-tax-report.html https://www.nytimes.com/2017/03/09/business/economy/corporat... [3] https://www.politico.com/interactives/2017/35-percent-corporate-tax-rate-100-companies/ https://www.politico.com/interactives/2017/35-percent-corpor... [4] https://itep.org/the-35-percent-corporate-tax-myth/ https://itep.org/the-35-percent-corporate-tax-myth/
        valuearb 9y ago
        This is ignorant and misleading, the only reason effective rates are lower than 35% is because of tax deferral, specifically for foreign earnings. Taxes on those foreign earnings are still owed when repatriated, but it would be foolish to repatriate them when companies would have to pay over 40% in both state and federal taxes, and their shareholders an additional 20%+ on any dividends. Most countries don't tax their companies foreign earnings at all, so the rates don't even compare. The real corporate income tax rate should be zero. There is no reason to tax investment, it's hugely counterproductive. Raise the capital gains and dividend tax rates to personal income tax rates, and eliminate corporate income taxes, you've eliminated double taxation and restored progressively to our tax system. There is zero reason an 80 year old retiree living on a fixed income should be paying over 60% in taxes on her Apple dividends.
        drak0n1c 9y ago
        A lower tax rate is a boon to small and mid sized US companies that make up the majority of the economy and don't have the financial scale or international presence needed to take advantage of those loopholes. These companies compete daily against foreign firms, and against US conglomerates. I don't see how your comment counters the parent's argument that this a good thing for international competitiveness.
      - MarkMc 9y ago
        Not sure what your source is for that claim, but when you look at corporate tax revenue as a percentage of GDP the US is significantly below average: https://espnfivethirtyeight-files-wordpress-com.cdn.ampproject.org/i/s/espnfivethirtyeight.files.wordpress.com/2014/04/chalabi-tax-rates-24.png?w=1150&quality=90&strip=info https://espnfivethirtyeight-files-wordpress-com.cdn.ampproje...
    - valuearb 9y ago
      Lowering the corporate tax rate to 20% goes along way to making the US tax system better for everyone.
      - adamnemecek 9y ago
        How?
        valuearb 9y ago
        Corporate income taxes are a double layer of taxes on investment. Investment is good, and lower taxes means more investment. Apple's shareholders are currently subject to 40%+ total tax rates on dividends paid from US profits, and 60%+ total tax rates on dividends paid from foreign profits. Lowering the portion that's corporate income tax rates makes these rates far more reasonable.
        Nursie 9y ago
        Investment gets to be taken out before tax in most places. Investment by the company in R&D, growth and training becomes more attractive in a higher tax environment.
        valuearb 9y ago
        Investments that companies make aren't an expense per se. It's almost always "capitalized" as an asset and can't be expensed, only expenses can. But we are talking about investment in businesses by investors/owners. Imagine a successful US (California) company called Shmapple approaches you about funding a joint venture. You invest $10M for half of the shares in a subsidiary that will build a factory for a new product they've designed, they sell the resulting goods and split all profits with you. So you ask, what will my share of the profits be? The company gives you very reasonable financial forecasts showing the factory should generate $3M a year in profit on average, grossing you $1.5M a year on your $10 million dollar investment, or 15%. But wait, you say. I don't care about gross profits, only net profits after taxes. So you calculate it. First they have to pay California corporate income taxes (8.84%), about $260,000. Then they have to pay 35% federal corporate income taxes on what's left, or $1,180 more, leaving $1.78M (59%) left or $900k to you. But that's just the corporate level, you still haven't paid your taxes yet. When the company pays you your share of the profits, you now owe income tax in your state, and dividend tax to the federal government. Lets say you also live in California, in the top bracket you average around 11%, or another $100k. And 20% for federal dividend tax, or another $160k. So you will net a little less than $640k, or a 6.5% after tax return on your investment. But wait, it gets worse. Shmapple tells you that their business model is highly international. About 60% of the profits will actually be earned overseas, so they will also be forced to pay income taxes in every country products are sold in. So that's another 10% off the top. So you redo the math again, and now you only get $600,000 a year, or a 6% after tax profit (and you've lost $900k, or 60%, of your profits to taxes!). So you say, hell no, I'm not funding that factory! I can make nearly that much risk free in treasury bonds, taking the huge risk on a new business for only an extra 1-2% a year would be colossally dumb. So Schmapple says to you, okay, we've got a way to lower everyones taxes. Turns out we can defer the taxes on our foreign earnings if we don't bring them back to the U.S. We'll find a friendly country with an extremely low tax rate and deposit the profits there. And we'll wait for the US government to wake up and realize how awful their corporate tax system is, and pay the taxes then at a lower tax rate. In the mean time we can borrow against the foreign bank deposits and pay you dividends from that. So you say, yea, even with all that hard work, my effective tax rate is still going to be close to 50%. You are just deferring, not avoiding, taxes, and when we pay them the future US corporate rate is still going to be pretty high, 20% or more. So you make a counter-offer. Let's build the factory and incorporate the joint venture in Shmireland, a fair country across the sea. Sure the Shmirish might not be quite as good as workers as Californians are (maybe, maybe not, but they ain't much worse), but look at the tax savings. Building in Schmireland means paying a 12.5% corporate income tax rate. Schmireland also doesn't tax world-wide income, just the income earned in Schmireland. We'll account for our profits being the same 60% rest of world (at an average 10% income tax rates), and 40% in Schmireland where we make the products. So our average tax rate is 11% TOTAL!. Now the net corporate profits are nearly $2.7M, and your share is $1.35M. After your California income and Federal dividend taxes, you will have around $960,000 left, or nearly 10% after tax. Now you tell Schmapple, do it in Schmireland and we have a deal! This is what's happening in real life. If the U.S. tries to close it's "loopholes", say by no longer letting companies defer earnings in their foreign subsidiaries, they'll just make it even more attractive to invest overseas. It's already insanely more attractive now, how much do you think Samsung pays in taxes compared to Apple? It's Samnsungs biggest advantage!
- malux85 9y ago
  I used to think this -- but then I heard the argument that if Apple was to behave "ethically" and pay the taxes that technically the law requires that they dont, then the shareholders can sue the company for not acting in their best interest. Even if the above isn't true (not a lawyer) we cannot rely on ethics alone, it will have to be enforced by law, otherwise nobody will do it
  - barrkel 9y ago
    There's another way to twist that: cheating the people out of their government's revenue is a fine way to build up negative goodwill. That has a longer term cost.
    - alehul 9y ago
      This is very true. There was a recent incident in France in which people protested outside an Apple store for them to "pay their taxes." Apple wasn't explicitly breaking the law, however customers are entitled to vote with their wallets, and showing their vote will likely have some effect on the company.
      - jotm 9y ago
        You're joking right? The tax deals and some protests will not affect Apple's bottom line in the slightest. Customers vote with their uncaring brains, which will pull out the wallets just as they did before.
        alehul 9y ago
        Clearly some customers are not uncaring. I'm not saying that one protest will have a massive impact on Apple's bottom line; just that: 1. protesting is a sign that the tax issue is an area customers care about, and those out protesting are likely a very small minority of those who feel that way. 2. the act of companies' feigned goodwill for a net profit could extend to any area customers care about, including legal vs ethical tax practices.
  - 9y ago
- deleted 9y ago
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- tpush 9y ago
  The difference between legal and ethical is irrelevant in this case. Both Apple and Ireland had an agreement regarding Apple's taxes which was deemed illegal by the EU. Apple and Ireland can count themselves lucky not to be additionally fined, since the likelihood that Apple's or Ireland's lawyers were unaware of the existing EU state aid laws are very slim.
- valuearb 9y ago
  First of all, nothing has been settled. This is just escrow, both Apple and Ireland are appealing. Second, what Apple did was both legal and ethical. It had $200B in cash that it had already paid taxes on to the countries where it was earned. Ireland offered them a near zero tax rate on the interest it would earn if they deposited it in Irish banks. That was a great deal for Ireland, and a good deal for Apple, and hurt no one.
  - matt4077 9y ago
    > and hurt no one. It hurt whatever country didn't participate in Ireland's race to the bottom, and would have been Apple's preferred base of operations when ignoring tax issues.
    - valuearb 9y ago
      There is no race to the bottom on bank deposits, Apple already paid taxes on these earnings to every european country.
      - matt4077 9y ago
        ? There isn't even a tax on bank deposits, in any country I know. So what, exactly, do you think this case is about?
        valuearb 9y ago
        Talking about taxes on interest, not deposits.
  - ainiriand 9y ago
    It hurts because it adds to the already big amount of inequality in this country (Ireland). Me, as a software engineer, I am pretty much accommodated economically but you should see the amount of junkies and homeless people in this town. It is shocking.
    - 9y ago
- philwelch 9y ago
  > There is a difference between legal and ethical I don't see this as an ethical issue on the part of Apple (or, for that matter, any other taxpayer). I don't think anyone does any soul-searching about their tax deductions, nor should they. The soul-searching happens when we decide what the taxes and deductions are in the first place.
gaius 9y ago
I suspect the deal is "we'll help you evade the taxes you should be paying other countries if you give us a slice"
- davweb 9y ago
  That's more or less what was already happening; which is why the EU told the Irish government they had to stop giving Apple a preferential tax rate unavailable to other companies. Ireland didn't want to collect this money.
- IBM 9y ago
  The "deal" is that Ireland is holding the back taxes in escrow until the appeals are exhausted. And because it's such a large amount, Ireland had to hire managers/custodians for it. The terms are probably about what the money is going to be invested in.
- djroomba 9y ago
  This is what will happen. Its a miscarriage of international justice.
LeoJiWoo 9y ago
So when are they going to pay taxes in the united states ? Its time the global community makes tax havens illegal.
- jeremyt 9y ago
  Next year, thanks to the tax bill.
- dublinben 9y ago
  The United States is the largest tax haven in the world, so don't count on it.
  - blennon 9y ago
    Can you elaborate on this?
    - bob_theslob646 9y ago
      He is bs'ing you. Companies don't incorporate in United States they are incorporating tax havens across the world ( everywhere but the United States)
      - adventured 9y ago
        It's based on this fraudulent premise that makes its rounds as an empty soundbyte (when back in reality, the US has the second highest effective corporate income tax rate in the OECD). The setup is that Delaware is being used as an information cloak (while there's zero evidence the US is actually being used as a real tax-evasion haven of any sort). This story explains the foundation of the soundbyte: https://www.washingtonpost.com/news/wonk/wp/2016/04/05/how-the-u-s-became-one-of-the-worlds-biggest-tax-havens/ https://www.washingtonpost.com/news/wonk/wp/2016/04/05/how-t...
        tribaal 9y ago
        Oh, it's a fraudulent premise and an empty soundbyte? It seems like you're quoting an article in the washington post, and similar articles from similarly reputable sources point it out (see http://www.nytimes.com/2012/07/01/business/how-delaware-thrives-as-a-corporate-tax-haven.html http://www.nytimes.com/2012/07/01/business/how-delaware-thri... for example). Just saying, it's a pretty convincing soundbyte that happens to cite its (verifiable) claims.
maxxxxx 9y ago
I always find it interesting the big companies get the opportunity to make a deal. As a small business you would just go to jail probably. Certainly nobody would negotiate with you.
- aroch 9y ago
  At least in the US, the IRS does negotiate with pretty much anyone who owes back taxes: https://www.irs.gov/payments/offer-in-compromise https://www.irs.gov/payments/offer-in-compromise
  - maxxxxx 9y ago
    Do they actually negotiate the amount of tax to pay? I know they will negotiate on payment terms.
    - throwaway613834 9y ago
      > Do they actually negotiate the amount of tax to pay? I know they will negotiate on payment terms. Confused, did you click the link at all? It literally answers your question right there at the beginning: > An offer in compromise allows you to settle your tax debt for less than the full amount you owe. [...] We generally approve an offer in compromise when the amount offered represents the most we can expect to collect within a reasonable period of time.
      - maxxxxx 9y ago
        "We generally approve an offer in compromise when the amount offered represents the most we can expect to collect within a reasonable period of time." I read this and should have phrased more carefully. I think this applies to people who really can't pay whereas Apple just doesn't want to pay.
        collyw 9y ago
        Exactly, Apple has loads of money, there is no reason they can't pay.
bob_theslob646 9y ago
>BRUSSELS—Ireland will begin collecting €13 billion ($15.46 billion) in back taxes from Apple Inc. as soon as early next year after both sides agreed to the terms of an escrow fund for the money, Ireland’s finance chief said Monday. That's a lot of money.
- ProAm 9y ago
  Not for Apple.
  - vidar 9y ago
    13bill is always a lot of money
    - ProAm 9y ago
      It was really never their money to begin with?
      - DigitalJack 9y ago
        What kind of nonsense is this? Of course the money was apple's to begin with, otherwise what was being taxed?
        ProAm 9y ago
        That was my point that it should have been paid as taxes in the past. Instead of robbing the host country and keeping it hostage.
        hackbinary 9y ago
        I think it was the EU who took Apple to court over unfair trade practices and special tax deal in Ireland. Not surprising that Ireland cut a deal with Apple. We'll see if the EU lets this go through. https://www.theguardian.com/business/2016/aug/30/apple-pay-back-taxes-eu-ruling-ireland-state-aid https://www.theguardian.com/business/2016/aug/30/apple-pay-b...
amenod 9y ago
Paywalled, can someone share another link? EDIT: searched for title and another link worked for me: http://www.cetusnews.com/tech/Apple-Agrees-Deal-With-Ireland-Over-%2415-Billion-Unpaid-Tax-Issue.HJbHuppMWG.html http://www.cetusnews.com/tech/Apple-Agrees-Deal-With-Ireland...
- neurotech1 9y ago
  Non-Paywall version: http://archive.is/N7JvW http://archive.is/N7JvW
gigatexal 9y ago
how about not linking to a paywalled article? https://www.independent.ie/business/technology/apple-agrees-to-start-paying-13bn-tax-bill-early-2018-a-year-after-deadline-36377528.html https://www.independent.ie/business/technology/apple-agrees-...
downandout 9y ago
Paywall bypass: https://m.facebook.com/flx/warn/?u=https%3A%2F%2Fwww.wsj.com%2Farticles%2Fapple-agrees-deal-with-ireland-over-15-billion-unpaid-tax-issue-1512392552 https://m.facebook.com/flx/warn/?u=https%3A%2F%2Fwww.wsj.com...
hackbinary 9y ago
Wait, wasn't it the EU who took Apple to court over a special tax deal for Apple in Ireland? https://www.theguardian.com/business/2016/aug/30/apple-pay-back-taxes-eu-ruling-ireland-state-aid https://www.theguardian.com/business/2016/aug/30/apple-pay-b...
- gsnedders 9y ago
  No. The European Commission ruled that Ireland gave preferential rates to Apple (and I believe this will go to the European Court of Justice, where the case will, I believe, be the EC v. Ireland; Apple aren't directly a party of the case).
Isamu 9y ago
All this says is the money will be placed in an escrow account while Apple and Ireland both appeal the decision, which they both seem confident to prevail eventually. They haven't conceded anything yet. The ball is still in play. [edit] I'm not advocating for either Apple or Ireland, just making a factual comment. I think corporations should pay a fair tax.
ancorevard 9y ago
Apple is the largest taxpayer in the world. I see a lot of misinformation in the comments section here. This may help them. https://www.apple.com/newsroom/2017/11/the-facts-about-apple-tax-payments/ https://www.apple.com/newsroom/2017/11/the-facts-about-apple...
- dmach 9y ago
  If you pay the most tax you have implicitly paid the required amount of tax is not a good argument. You can could response to those comments so they can be discussed or just declare them fake news if that's how you feel. Nothing in that link addresses the EU ruling or this deal.
  - godelski 9y ago
    Especially considering that Apple is also the wealthiest company. So it should be expected that they should pay (or nearly pay) the highest taxes.
  - valuearb 9y ago
    Ok, Apple pays the most taxes of any company in the world, and it also pays all the taxes it's legally obligated to pay. And in the case of the Irish deal, it hugely benefited Ireland, much more than Apple.
lifeisstillgood 9y ago
so is this an opportunity for collective action. let's say some one owes 100 million in taxes, and can negotiate that down to 50 mil. does that mean i can get 1-2000 of "normal" folks and if we hang together we can get a 50 % rebate ? (the hang together reference being most apt)
MarkMc 9y ago
If Apple is forced to pay a big chunk of tax in the EU, why wouldn't they spin off their EU sales operations as a completely separate independent company? Apple US (or Apple Cayman Islands) could then sell iPhones to Apple EU and demand a wholesale price very close to the retail price. Apple EU would therefore make very little profit and pay very little EU tax.
- tomcorrigan 9y ago
  That's called transfer pricing and is essentially illegal in almost every jurisdiction. There are of course plenty of loopholes and ways around it and large companies such as Apple spend a fortune with the big 4 accounting firms to take advantage of every such loophole.
  - MarkMc 9y ago
    Would transfer pricing still be an issue if Apple EU was a completely separate company?
abritinthebay 9y ago
Reminder: both Apple AND Ireland agree that they don't actually owe any tax. So it's not that Apple didn't pay tax to Ireland - it's that they were specifically contracted to pay a certain rate and the EU disagrees. So the headline is incredibly misleading.
known 9y ago
Tax Apple revenues, not profits.
romanovcode 9y ago
Just to clear things up here: Ireland does not want the money, they much rather have this special deal with Apple, it's EU who is forcing Apple to pay and forcing Ireland to stop having special deals with companies.
znpy 9y ago
I was unable to read the article because of a paywall. Can we please make it a policy not to allow paywalled content?

171 points by antr 9y ago

Finally! I love Apple but taxes should be paid. There is a difference between legal and ethical and US companies should begin to understand that. So hopefully others will follow suit.

adamnemecek 9y ago
The tax system needs to be fixed.
- stochastic_monk 9y ago
  It's going to need a lot more fixing after the disaster that happened this past week in US Congress.
  - adventured 9y ago
    US corporations will finally be more competitive on their effective income tax rates, with such nations as: Britain, Ireland, Sweden, Norway, Finland, Canada, China, Switzerland, Czech, Taiwan, Egypt, Estonia, Iceland, Israel, Italy, South Korea, the Netherlands, Turkey, Portugal, Romania, Russia, Singapore, Spain, Vietnam, Thailand and so on. All of those nations have significantly lower effective rates.
    - stochastic_monk 9y ago
      That's not accurate. Considering the enormous loopholes, corporations in the US actually pay something comparable to these other developed countries. The average company pays something between 12% [1] and 22% [2] -- much less than the ostensible tax rate. (See also [3,4].) Now we have nearly all the same loopholes and a lower base rate: a simple recipe for disaster. [1] http://money.cnn.com/2013/07/01/news/economy/corporate-tax-rate/index.html http://money.cnn.com/2013/07/01/news/economy/corporate-tax-r... [2] https://www.nytimes.com/2017/03/09/business/economy/corporate-tax-report.html https://www.nytimes.com/2017/03/09/business/economy/corporat... [3] https://www.politico.com/interactives/2017/35-percent-corporate-tax-rate-100-companies/ https://www.politico.com/interactives/2017/35-percent-corpor... [4] https://itep.org/the-35-percent-corporate-tax-myth/ https://itep.org/the-35-percent-corporate-tax-myth/
      - valuearb 9y ago
        This is ignorant and misleading, the only reason effective rates are lower than 35% is because of tax deferral, specifically for foreign earnings. Taxes on those foreign earnings are still owed when repatriated, but it would be foolish to repatriate them when companies would have to pay over 40% in both state and federal taxes, and their shareholders an additional 20%+ on any dividends. Most countries don't tax their companies foreign earnings at all, so the rates don't even compare. The real corporate income tax rate should be zero. There is no reason to tax investment, it's hugely counterproductive. Raise the capital gains and dividend tax rates to personal income tax rates, and eliminate corporate income taxes, you've eliminated double taxation and restored progressively to our tax system. There is zero reason an 80 year old retiree living on a fixed income should be paying over 60% in taxes on her Apple dividends.
      - drak0n1c 9y ago
        A lower tax rate is a boon to small and mid sized US companies that make up the majority of the economy and don't have the financial scale or international presence needed to take advantage of those loopholes. These companies compete daily against foreign firms, and against US conglomerates. I don't see how your comment counters the parent's argument that this a good thing for international competitiveness.
    - MarkMc 9y ago
      Not sure what your source is for that claim, but when you look at corporate tax revenue as a percentage of GDP the US is significantly below average: https://espnfivethirtyeight-files-wordpress-com.cdn.ampproject.org/i/s/espnfivethirtyeight.files.wordpress.com/2014/04/chalabi-tax-rates-24.png?w=1150&quality=90&strip=info https://espnfivethirtyeight-files-wordpress-com.cdn.ampproje...
  - valuearb 9y ago
    Lowering the corporate tax rate to 20% goes along way to making the US tax system better for everyone.
    - adamnemecek 9y ago
      How?
      - valuearb 9y ago
        Corporate income taxes are a double layer of taxes on investment. Investment is good, and lower taxes means more investment. Apple's shareholders are currently subject to 40%+ total tax rates on dividends paid from US profits, and 60%+ total tax rates on dividends paid from foreign profits. Lowering the portion that's corporate income tax rates makes these rates far more reasonable.
        Nursie 9y ago
        Investment gets to be taken out before tax in most places. Investment by the company in R&D, growth and training becomes more attractive in a higher tax environment.
        valuearb 9y ago
        Investments that companies make aren't an expense per se. It's almost always "capitalized" as an asset and can't be expensed, only expenses can. But we are talking about investment in businesses by investors/owners. Imagine a successful US (California) company called Shmapple approaches you about funding a joint venture. You invest $10M for half of the shares in a subsidiary that will build a factory for a new product they've designed, they sell the resulting goods and split all profits with you. So you ask, what will my share of the profits be? The company gives you very reasonable financial forecasts showing the factory should generate $3M a year in profit on average, grossing you $1.5M a year on your $10 million dollar investment, or 15%. But wait, you say. I don't care about gross profits, only net profits after taxes. So you calculate it. First they have to pay California corporate income taxes (8.84%), about $260,000. Then they have to pay 35% federal corporate income taxes on what's left, or $1,180 more, leaving $1.78M (59%) left or $900k to you. But that's just the corporate level, you still haven't paid your taxes yet. When the company pays you your share of the profits, you now owe income tax in your state, and dividend tax to the federal government. Lets say you also live in California, in the top bracket you average around 11%, or another $100k. And 20% for federal dividend tax, or another $160k. So you will net a little less than $640k, or a 6.5% after tax return on your investment. But wait, it gets worse. Shmapple tells you that their business model is highly international. About 60% of the profits will actually be earned overseas, so they will also be forced to pay income taxes in every country products are sold in. So that's another 10% off the top. So you redo the math again, and now you only get $600,000 a year, or a 6% after tax profit (and you've lost $900k, or 60%, of your profits to taxes!). So you say, hell no, I'm not funding that factory! I can make nearly that much risk free in treasury bonds, taking the huge risk on a new business for only an extra 1-2% a year would be colossally dumb. So Schmapple says to you, okay, we've got a way to lower everyones taxes. Turns out we can defer the taxes on our foreign earnings if we don't bring them back to the U.S. We'll find a friendly country with an extremely low tax rate and deposit the profits there. And we'll wait for the US government to wake up and realize how awful their corporate tax system is, and pay the taxes then at a lower tax rate. In the mean time we can borrow against the foreign bank deposits and pay you dividends from that. So you say, yea, even with all that hard work, my effective tax rate is still going to be close to 50%. You are just deferring, not avoiding, taxes, and when we pay them the future US corporate rate is still going to be pretty high, 20% or more. So you make a counter-offer. Let's build the factory and incorporate the joint venture in Shmireland, a fair country across the sea. Sure the Shmirish might not be quite as good as workers as Californians are (maybe, maybe not, but they ain't much worse), but look at the tax savings. Building in Schmireland means paying a 12.5% corporate income tax rate. Schmireland also doesn't tax world-wide income, just the income earned in Schmireland. We'll account for our profits being the same 60% rest of world (at an average 10% income tax rates), and 40% in Schmireland where we make the products. So our average tax rate is 11% TOTAL!. Now the net corporate profits are nearly $2.7M, and your share is $1.35M. After your California income and Federal dividend taxes, you will have around $960,000 left, or nearly 10% after tax. Now you tell Schmapple, do it in Schmireland and we have a deal! This is what's happening in real life. If the U.S. tries to close it's "loopholes", say by no longer letting companies defer earnings in their foreign subsidiaries, they'll just make it even more attractive to invest overseas. It's already insanely more attractive now, how much do you think Samsung pays in taxes compared to Apple? It's Samnsungs biggest advantage!
malux85 9y ago
I used to think this -- but then I heard the argument that if Apple was to behave "ethically" and pay the taxes that technically the law requires that they dont, then the shareholders can sue the company for not acting in their best interest. Even if the above isn't true (not a lawyer) we cannot rely on ethics alone, it will have to be enforced by law, otherwise nobody will do it
- barrkel 9y ago
  There's another way to twist that: cheating the people out of their government's revenue is a fine way to build up negative goodwill. That has a longer term cost.
  - alehul 9y ago
    This is very true. There was a recent incident in France in which people protested outside an Apple store for them to "pay their taxes." Apple wasn't explicitly breaking the law, however customers are entitled to vote with their wallets, and showing their vote will likely have some effect on the company.
    - jotm 9y ago
      You're joking right? The tax deals and some protests will not affect Apple's bottom line in the slightest. Customers vote with their uncaring brains, which will pull out the wallets just as they did before.
      - alehul 9y ago
        Clearly some customers are not uncaring. I'm not saying that one protest will have a massive impact on Apple's bottom line; just that: 1. protesting is a sign that the tax issue is an area customers care about, and those out protesting are likely a very small minority of those who feel that way. 2. the act of companies' feigned goodwill for a net profit could extend to any area customers care about, including legal vs ethical tax practices.
- 9y ago
deleted 9y ago
[deleted]
tpush 9y ago
The difference between legal and ethical is irrelevant in this case. Both Apple and Ireland had an agreement regarding Apple's taxes which was deemed illegal by the EU. Apple and Ireland can count themselves lucky not to be additionally fined, since the likelihood that Apple's or Ireland's lawyers were unaware of the existing EU state aid laws are very slim.
valuearb 9y ago
First of all, nothing has been settled. This is just escrow, both Apple and Ireland are appealing. Second, what Apple did was both legal and ethical. It had $200B in cash that it had already paid taxes on to the countries where it was earned. Ireland offered them a near zero tax rate on the interest it would earn if they deposited it in Irish banks. That was a great deal for Ireland, and a good deal for Apple, and hurt no one.
- matt4077 9y ago
  > and hurt no one. It hurt whatever country didn't participate in Ireland's race to the bottom, and would have been Apple's preferred base of operations when ignoring tax issues.
  - valuearb 9y ago
    There is no race to the bottom on bank deposits, Apple already paid taxes on these earnings to every european country.
    - matt4077 9y ago
      ? There isn't even a tax on bank deposits, in any country I know. So what, exactly, do you think this case is about?
      - valuearb 9y ago
        Talking about taxes on interest, not deposits.
- ainiriand 9y ago
  It hurts because it adds to the already big amount of inequality in this country (Ireland). Me, as a software engineer, I am pretty much accommodated economically but you should see the amount of junkies and homeless people in this town. It is shocking.
  - 9y ago
philwelch 9y ago
> There is a difference between legal and ethical I don't see this as an ethical issue on the part of Apple (or, for that matter, any other taxpayer). I don't think anyone does any soul-searching about their tax deductions, nor should they. The soul-searching happens when we decide what the taxes and deductions are in the first place.

gaius 9y ago

I suspect the deal is "we'll help you evade the taxes you should be paying other countries if you give us a slice"

davweb 9y ago
That's more or less what was already happening; which is why the EU told the Irish government they had to stop giving Apple a preferential tax rate unavailable to other companies. Ireland didn't want to collect this money.
IBM 9y ago
The "deal" is that Ireland is holding the back taxes in escrow until the appeals are exhausted. And because it's such a large amount, Ireland had to hire managers/custodians for it. The terms are probably about what the money is going to be invested in.
djroomba 9y ago
This is what will happen. Its a miscarriage of international justice.

LeoJiWoo 9y ago

So when are they going to pay taxes in the united states ? Its time the global community makes tax havens illegal.

jeremyt 9y ago
Next year, thanks to the tax bill.
dublinben 9y ago
The United States is the largest tax haven in the world, so don't count on it.
- blennon 9y ago
  Can you elaborate on this?
  - bob_theslob646 9y ago
    He is bs'ing you. Companies don't incorporate in United States they are incorporating tax havens across the world ( everywhere but the United States)
    - adventured 9y ago
      It's based on this fraudulent premise that makes its rounds as an empty soundbyte (when back in reality, the US has the second highest effective corporate income tax rate in the OECD). The setup is that Delaware is being used as an information cloak (while there's zero evidence the US is actually being used as a real tax-evasion haven of any sort). This story explains the foundation of the soundbyte: https://www.washingtonpost.com/news/wonk/wp/2016/04/05/how-the-u-s-became-one-of-the-worlds-biggest-tax-havens/ https://www.washingtonpost.com/news/wonk/wp/2016/04/05/how-t...
      - tribaal 9y ago
        Oh, it's a fraudulent premise and an empty soundbyte? It seems like you're quoting an article in the washington post, and similar articles from similarly reputable sources point it out (see http://www.nytimes.com/2012/07/01/business/how-delaware-thrives-as-a-corporate-tax-haven.html http://www.nytimes.com/2012/07/01/business/how-delaware-thri... for example). Just saying, it's a pretty convincing soundbyte that happens to cite its (verifiable) claims.

maxxxxx 9y ago

I always find it interesting the big companies get the opportunity to make a deal. As a small business you would just go to jail probably. Certainly nobody would negotiate with you.

aroch 9y ago
At least in the US, the IRS does negotiate with pretty much anyone who owes back taxes: https://www.irs.gov/payments/offer-in-compromise https://www.irs.gov/payments/offer-in-compromise
- maxxxxx 9y ago
  Do they actually negotiate the amount of tax to pay? I know they will negotiate on payment terms.
  - throwaway613834 9y ago
    > Do they actually negotiate the amount of tax to pay? I know they will negotiate on payment terms. Confused, did you click the link at all? It literally answers your question right there at the beginning: > An offer in compromise allows you to settle your tax debt for less than the full amount you owe. [...] We generally approve an offer in compromise when the amount offered represents the most we can expect to collect within a reasonable period of time.
    - maxxxxx 9y ago
      "We generally approve an offer in compromise when the amount offered represents the most we can expect to collect within a reasonable period of time." I read this and should have phrased more carefully. I think this applies to people who really can't pay whereas Apple just doesn't want to pay.
      - collyw 9y ago
        Exactly, Apple has loads of money, there is no reason they can't pay.

bob_theslob646 9y ago

>BRUSSELS—Ireland will begin collecting €13 billion ($15.46 billion) in back taxes from Apple Inc. as soon as early next year after both sides agreed to the terms of an escrow fund for the money, Ireland’s finance chief said Monday. That's a lot of money.

ProAm 9y ago
Not for Apple.
- vidar 9y ago
  13bill is always a lot of money
  - ProAm 9y ago
    It was really never their money to begin with?
    - DigitalJack 9y ago
      What kind of nonsense is this? Of course the money was apple's to begin with, otherwise what was being taxed?
      - ProAm 9y ago
        That was my point that it should have been paid as taxes in the past. Instead of robbing the host country and keeping it hostage.
        hackbinary 9y ago
        I think it was the EU who took Apple to court over unfair trade practices and special tax deal in Ireland. Not surprising that Ireland cut a deal with Apple. We'll see if the EU lets this go through. https://www.theguardian.com/business/2016/aug/30/apple-pay-back-taxes-eu-ruling-ireland-state-aid https://www.theguardian.com/business/2016/aug/30/apple-pay-b...

amenod 9y ago

Paywalled, can someone share another link? EDIT: searched for title and another link worked for me: http://www.cetusnews.com/tech/Apple-Agrees-Deal-With-Ireland-Over-%2415-Billion-Unpaid-Tax-Issue.HJbHuppMWG.html http://www.cetusnews.com/tech/Apple-Agrees-Deal-With-Ireland...

neurotech1 9y ago
Non-Paywall version: http://archive.is/N7JvW http://archive.is/N7JvW

gigatexal 9y ago

how about not linking to a paywalled article? https://www.independent.ie/business/technology/apple-agrees-to-start-paying-13bn-tax-bill-early-2018-a-year-after-deadline-36377528.html https://www.independent.ie/business/technology/apple-agrees-...

downandout 9y ago

Paywall bypass: https://m.facebook.com/flx/warn/?u=https%3A%2F%2Fwww.wsj.com%2Farticles%2Fapple-agrees-deal-with-ireland-over-15-billion-unpaid-tax-issue-1512392552 https://m.facebook.com/flx/warn/?u=https%3A%2F%2Fwww.wsj.com...

hackbinary 9y ago

Wait, wasn't it the EU who took Apple to court over a special tax deal for Apple in Ireland? https://www.theguardian.com/business/2016/aug/30/apple-pay-back-taxes-eu-ruling-ireland-state-aid https://www.theguardian.com/business/2016/aug/30/apple-pay-b...

gsnedders 9y ago
No. The European Commission ruled that Ireland gave preferential rates to Apple (and I believe this will go to the European Court of Justice, where the case will, I believe, be the EC v. Ireland; Apple aren't directly a party of the case).

Isamu 9y ago

All this says is the money will be placed in an escrow account while Apple and Ireland both appeal the decision, which they both seem confident to prevail eventually. They haven't conceded anything yet. The ball is still in play. [edit] I'm not advocating for either Apple or Ireland, just making a factual comment. I think corporations should pay a fair tax.

ancorevard 9y ago

Apple is the largest taxpayer in the world. I see a lot of misinformation in the comments section here. This may help them. https://www.apple.com/newsroom/2017/11/the-facts-about-apple-tax-payments/ https://www.apple.com/newsroom/2017/11/the-facts-about-apple...

dmach 9y ago
If you pay the most tax you have implicitly paid the required amount of tax is not a good argument. You can could response to those comments so they can be discussed or just declare them fake news if that's how you feel. Nothing in that link addresses the EU ruling or this deal.
- godelski 9y ago
  Especially considering that Apple is also the wealthiest company. So it should be expected that they should pay (or nearly pay) the highest taxes.
- valuearb 9y ago
  Ok, Apple pays the most taxes of any company in the world, and it also pays all the taxes it's legally obligated to pay. And in the case of the Irish deal, it hugely benefited Ireland, much more than Apple.

lifeisstillgood 9y ago

so is this an opportunity for collective action. let's say some one owes 100 million in taxes, and can negotiate that down to 50 mil. does that mean i can get 1-2000 of "normal" folks and if we hang together we can get a 50 % rebate ? (the hang together reference being most apt)

MarkMc 9y ago

If Apple is forced to pay a big chunk of tax in the EU, why wouldn't they spin off their EU sales operations as a completely separate independent company? Apple US (or Apple Cayman Islands) could then sell iPhones to Apple EU and demand a wholesale price very close to the retail price. Apple EU would therefore make very little profit and pay very little EU tax.

tomcorrigan 9y ago
That's called transfer pricing and is essentially illegal in almost every jurisdiction. There are of course plenty of loopholes and ways around it and large companies such as Apple spend a fortune with the big 4 accounting firms to take advantage of every such loophole.
- MarkMc 9y ago
  Would transfer pricing still be an issue if Apple EU was a completely separate company?

abritinthebay 9y ago

Reminder: both Apple AND Ireland agree that they don't actually owe any tax. So it's not that Apple didn't pay tax to Ireland - it's that they were specifically contracted to pay a certain rate and the EU disagrees. So the headline is incredibly misleading.

known 9y ago

Tax Apple revenues, not profits.

romanovcode 9y ago

Just to clear things up here: Ireland does not want the money, they much rather have this special deal with Apple, it's EU who is forcing Apple to pay and forcing Ireland to stop having special deals with companies.

znpy 9y ago

I was unable to read the article because of a paywall. Can we please make it a policy not to allow paywalled content?