Paradise Papers: Apple drawn into tax haven scandal

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Paradise Papers: Apple drawn into tax haven scandal

The Paradise Papers contain a massive trove of documents showing offshore empires of tech firms.

Apple is the latest company to be drawn into the fallout from the Paradise Papers. Leaked documents show that the company looked to move $US250 billion from its Irish subsidiaries to other offshore jurisdictions with more gentle taxation arrangements.

The documents show that Apple asked corporate services provider and law firm Appleby to investigate the pros and cons of the British Virgin Islands, Bermuda, the Cayman Islands, Mauritius, the Isle of Man, Jersey and Guernsey. The company ultimately moved its wealth to Jersey, which happened to (for the most part) end corporate taxation in 2008.

If this money were kept within the United States, where Apple is based, the company would be paying a rate of 35% tax on those profits, which would seriously help the country's finances.

Apple has issued a statement defending its tax arrangements, and these broadly come back to one accurate point: the company acted according to the letter of the law: "At Apple we follow the laws, and if the system changes we will comply," the company wrote in a statement.

"The debate over Apple's taxes is not about how much we owe but where we owe it," said a spokesperson for the company. "As the largest taxpayer in the world we've paid over $US35 billion in corporate income taxes over the past three years, plus billions of dollars more in property tax, payroll tax, sales tax and VAT. We believe every company has a responsibility to pay the taxes they owe and we're proud of the economic contributions we make to the countries and communities where we do business.

"Under the current international tax system, profits are taxed based on where the value is created. The taxes Apple pays to countries around the world are based on that principle. The vast majority of the value in our products is indisputably created in the United States - where we do our design, development, engineering work and much more - so the majority of our taxes are owed to the US.

"When Ireland changed its tax laws in 2015, we complied by changing the residency of our Irish subsidiaries and we informed Ireland, the European Commission and the United States. The changes we made did not reduce our tax payments in any country. In fact, our payments to Ireland increased significantly and over the last three years we've paid $US1.5 billion in tax there - 7% of all corporate income taxes paid in that country. Our changes also ensured that our tax obligation to the United States was not reduced."

The company spokesperson closed their statement by expressing that Apple would welcome global action to reform the way tax is collected. "We strongly support efforts from the global community toward comprehensive international tax reform and a far simpler system, and we will continue to advocate for that."

Picture: Bigstock

This article originally appeared at itpro.co.uk

Copyright © ITPro, Dennis Publishing
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