Apple ordered to pay up to 13 billion dollars in back taxes for taxes credits illegally granted by Ireland

[SimpleDon]

Corporate citizenship. Bolding is mine.

The European commission has ordered Apple to pay back the Irish state up to €13bn in taxes in a landmark ruling. Apple paid a tax rate on European profits of between 0.005% and 1%, according to the EU’s executive arm. The US technology group, and Ireland, have said they will appeal against the decision but it will have ramifications for countries and companies across Europe.

... The commission has found that Apple benefited from a sweetheart tax ruling granted by Ireland decades ago, saving the iPhone-maker huge sums in taxes over many years. The ruling was not only generous but gave Apple special tax treatment unavailable to competitors. As such, competition officials in Brussels have found it amounted to unlawful state aid under EU rules. The sweetheart deal allowed Apple to shift up to two-thirds of its global profits through a handful of Irish-registered companies that routinely paid less than 1% tax.

Apple was able to pretend that up to 66% of their worldwide profits were earned in Ireland. This is ridiculous.

How on earth would Apple be able to pay back 13 billion dollars?

Yes it can. The technology group – valued at $570bn on the stock market – has a cash stockpile of more than $230bn, of which more than 90% is kept outside the US so that it does not attract US tax. Therefore the ruling should not have a material impact on the group’s finances or its considerable research and development spending.

https://www.theguardian.com/business/2016/aug/30/eu-apple-ireland-tax-ruling-q-and-a

This is one of the reasons why I advocate doing away with the corporate income tax entirely and to tax the stockholders on the profits earned as if they are the owners of the company, i.e. on total profits whether distributed or retained, and no matter where the profits are earned.

It would end this and many more efforts to avoid taxes by the corporations. The corporations would have no incentive to lobby for tax breaks or to lie about in which country they earned the profits. The individual shareholders won't be able to so thoroughly corrupt Congress through the soft bribery of campaign contributions and the corporations could stop being 'people', could stop operating as tax havens for the rich and go back to concentrating on their business.

 

[Jayjay]

Corporate citizenship. Bolding is mine.



Apple was able to pretend that up to 66% of their worldwide profits were earned in Ireland. This is ridiculous.

How on earth would Apple be able to pay back 13 billion dollars?

Yes it can. The technology group – valued at $570bn on the stock market – has a cash stockpile of more than $230bn, of which more than 90% is kept outside the US so that it does not attract US tax. Therefore the ruling should not have a material impact on the group’s finances or its considerable research and development spending.

https://www.theguardian.com/business/2016/aug/30/eu-apple-ireland-tax-ruling-q-and-a

This is one of the reasons why I advocate doing away with the corporate income tax entirely and to tax the stockholders on the profits earned as if they are the owners of the company, i.e. on total profits whether distributed or retained, and no matter where the profits are earned.

It would end this and many more efforts to avoid taxes by the corporations. The corporations would have no incentive to lobby for tax breaks or to lie about in which country they earned the profits. The individual shareholders won't be able to so thoroughly corrupt Congress through the soft bribery of campaign contributions and the corporations could stop being 'people', could stop operating as tax havens for the rich and go back to concentrating on their business.

Good idea, but it would not solve the entire issue, only push it down to the shareholders. Major stockholders could still set up holding companies in countries where such taxes would not exist, or would be minimal.

 

[barbos]

Taxes should be paid where money are being made.
Corporate taxes should be set to zero or at a low enough level to make it unattractive to move to tax havens.
Increase sales or VAT tax. I mean Google not paying taxes in countries where they sell their ads is stupid
The whole thing is stupid, they are using ancient tax laws which were created when there were no such things as tax havens. They should have immediately changed the law the moment that bullshit was invented.

 

[SimpleDon]

Corporate citizenship. Bolding is mine.



Apple was able to pretend that up to 66% of their worldwide profits were earned in Ireland. This is ridiculous.

How on earth would Apple be able to pay back 13 billion dollars?



https://www.theguardian.com/business/2016/aug/30/eu-apple-ireland-tax-ruling-q-and-a

This is one of the reasons why I advocate doing away with the corporate income tax entirely and to tax the stockholders on the profits earned as if they are the owners of the company, i.e. on total profits whether distributed or retained, and no matter where the profits are earned.

It would end this and many more efforts to avoid taxes by the corporations. The corporations would have no incentive to lobby for tax breaks or to lie about in which country they earned the profits. The individual shareholders won't be able to so thoroughly corrupt Congress through the soft bribery of campaign contributions and the corporations could stop being 'people', could stop operating as tax havens for the rich and go back to concentrating on their business.

Good idea, but it would not solve the entire issue, only push it down to the shareholders. Major stockholders could still set up holding companies in countries where such taxes would not exist, or would be minimal.

No, like S corporations. and limited partnerships the shareholders will pay taxes in the country that they live in. No matter where the money is made.

 

[Axulus]

Sales or value added taxes is where we need to go. Tax the product where the consumption is taking place. No fuss, no worry, no dispute on who owes what.

Note with the Apple case, however, that Ireland is actively fighting against this ruling. It seems quite bizzare that the EU is ruling that Apple owes Irish tax authorities money which Ireland is saying is not the case.

 

[Axulus]

Good idea, but it would not solve the entire issue, only push it down to the shareholders. Major stockholders could still set up holding companies in countries where such taxes would not exist, or would be minimal.

No, like S corporations. and limited partnerships the shareholders will pay taxes in the country that they live in. No matter where the money is made.

Not true - only the United States has this concept of taxing "worldwide income" - most countries don't require you to pay taxes on foreign income.

Additionally, a foreign subsidiary has to be set up in the country where business activities are taking place. The local authorities tax the profits of that subsidiary (and/or the dividends paid out to the owners when they get paid out). The tricky part is when the parent company sells the product to the subsidiary (or vise versa). If the parent company overcharges (undercharges), it can transfer profits to the parent from the subsidiary (or from the parent to the subsidiary).

There are all other sorts of more complicated arrangements than what I describe above as well, where there is no clear agreement on how to allocate the profits between companies when it involves an intercompany transaction - which take place all the time these days with multinationals.

 

[dismal]

No, like S corporations. and limited partnerships the shareholders will pay taxes in the country that they live in. No matter where the money is made.

Not true - only the United States has this concept of taxing "worldwide income" - most countries don't require you to pay taxes on foreign income.

Additionally, a foreign subsidiary has to be set up in the country where business activities are taking place. The local authorities tax the profits of that subsidiary (and/or the dividends paid out to the owners when they get paid out). The tricky part is when the parent company sells the product to the subsidiary (or vise versa). If the parent company overcharges (undercharges), it can transfer profits to the parent from the subsidiary (or from the parent to the subsidiary).

There are all other sorts of more complicated arrangements than what I describe above as well, where there is no clear agreement on how to allocate the profits between companies when it involves an intercompany transaction - which take place all the time these days with multinationals.

International taxation is a morass with about a million special treatments, but when I had some work exposure to it years ago the general rule was the US taxed global earnings of US companies at the US rate but credited back local taxes paid up to the US rate. So if you did business in a foreign country with a 15% rate and the US rate was 35% you'd effectively pay 15% to the country where you made the money and another 20% to the US.

Since the US corporate rate is about the highest in the world this creates a strong incentive not to locate your company HQ in the US if you have international income.

 

[Trausti]

Maybe it's time for Irexit.

http://www.apple.com/ie/customer-letter/

 

[Playball40]

Sales or value added taxes is where we need to go. Tax the product where the consumption is taking place. No fuss, no worry, no dispute on who owes what.

Note with the Apple case, however, that Ireland is actively fighting against this ruling. It seems quite bizzare that the EU is ruling that Apple owes Irish tax authorities money which Ireland is saying is not the case.

And unfair.

 

[repoman]

American Double Taxation turns into Double NON Taxation if you have the pull of Apple.

 

[Harry Bosch]

Sales or value added taxes is where we need to go. Tax the product where the consumption is taking place. No fuss, no worry, no dispute on who owes what.

Note with the Apple case, however, that Ireland is actively fighting against this ruling. It seems quite bizzare that the EU is ruling that Apple owes Irish tax authorities money which Ireland is saying is not the case.

And unfair.

Why is it unfair?

 

[Axulus]

American Double Taxation turns into Double NON Taxation if you have the pull of Apple.

But the money is stuck in accounts, piling up and not being sent to the shareholders. It will be taxed once it is, but Apple is engaging in tax arbitrage - patiently waiting for reform to lower taxes in the future. It's a smart game and is founded on the current high US rates and the ridiculousness of those high rates applying to world wide income, even when everything to earn that money was done outside the borders of the US.

 

[Tigers!]

Let me see if I have this correct.

Ireland and Apple freely entered into an arrangement whereby Apple would pay Ireland an x% tax rate under agreed conditions.
Ireland and Apple both agreed that it is working well for them. Both are happy.

Why is the EU getting involved? What business is it of theirs? I thought Ireland not the EU determined Irish tax rates?

The Brexit is beginning to make more sense.

 

[barbos]

Sales or value added taxes is where we need to go. Tax the product where the consumption is taking place. No fuss, no worry, no dispute on who owes what.

That's what I said.

Note with the Apple case, however, that Ireland is actively fighting against this ruling. It seems quite bizzare that the EU is ruling that Apple owes Irish tax authorities money which Ireland is saying is not the case.

Of course Ireland says that, they will get 13bil and lose all their future tax haven "business".
Ireland have transferred some of their authority to EU, that's why EU can demand what they demand.
Tax havens must die.

 

[barbos]

Let me see if I have this correct.

Ireland and Apple freely entered into an arrangement whereby Apple would pay Ireland an x% tax rate under agreed conditions.
Ireland and Apple both agreed that it is working well for them. Both are happy.

Ireland and EU freely entered into an arrangement where Ireland surrenders some of their authority over taxes/spending etc. .....

Why is the EU getting involved? What business is it of theirs? I thought Ireland not the EU determined Irish tax rates?

The Brexit is beginning to make more sense.

Only if you expect Tax Haven model will last forever. EU can and willing to put an end to this business.

 

[Axulus]

Let me see if I have this correct.

Ireland and Apple freely entered into an arrangement whereby Apple would pay Ireland an x% tax rate under agreed conditions.
Ireland and Apple both agreed that it is working well for them. Both are happy.

Why is the EU getting involved? What business is it of theirs? I thought Ireland not the EU determined Irish tax rates?

The Brexit is beginning to make more sense.

Ireland denies making a special deal/agreement with Apple. If it did, it would violate a provision of the EU membership agreement which prohibits such deals.

The EU allows members to have low taxes so long as such tax deals are available to all.

 

[Loren Pechtel]

No, like S corporations. and limited partnerships the shareholders will pay taxes in the country that they live in. No matter where the money is made.

Not true - only the United States has this concept of taxing "worldwide income" - most countries don't require you to pay taxes on foreign income.

Additionally, a foreign subsidiary has to be set up in the country where business activities are taking place. The local authorities tax the profits of that subsidiary (and/or the dividends paid out to the owners when they get paid out). The tricky part is when the parent company sells the product to the subsidiary (or vise versa). If the parent company overcharges (undercharges), it can transfer profits to the parent from the subsidiary (or from the parent to the subsidiary).

There are all other sorts of more complicated arrangements than what I describe above as well, where there is no clear agreement on how to allocate the profits between companies when it involves an intercompany transaction - which take place all the time these days with multinationals.

But when you have a VAT system you in effect have worldwide taxation anyway.

 

[Axulus]

Not true - only the United States has this concept of taxing "worldwide income" - most countries don't require you to pay taxes on foreign income.

Additionally, a foreign subsidiary has to be set up in the country where business activities are taking place. The local authorities tax the profits of that subsidiary (and/or the dividends paid out to the owners when they get paid out). The tricky part is when the parent company sells the product to the subsidiary (or vise versa). If the parent company overcharges (undercharges), it can transfer profits to the parent from the subsidiary (or from the parent to the subsidiary).

There are all other sorts of more complicated arrangements than what I describe above as well, where there is no clear agreement on how to allocate the profits between companies when it involves an intercompany transaction - which take place all the time these days with multinationals.

But when you have a VAT system you in effect have worldwide taxation anyway.

No, not the same thing. The US does not get the VAT tax revenue on a product sold in Europe. It currently does get income tax revenue from profits generated in Europe. One country getting taxes on sales or profits generated anywhere in the world is what we are talking about here.

 

[ksen]

And unfair.

Why is it unfair?

I don't know about VAT but sales taxes are considered extremely regressive. If you care at all about income inequality, which you may not I don't know, then this is not the type of tax you should be championing.

http://www.citylab.com/work/2015/01...get-the-poor-and-widen-the-income-gap/384643/

 

[ksen]

Since the US corporate rate is about the highest in the world this creates a strong incentive not to locate your company HQ in the US if you have international income.

The effective US corporate tax rate is just about the same or maybe even a little lower than the international average.

http://www.forbes.com/sites/taxanalysts/2015/03/25/the-truth-about-corporate-tax-rates/#2eb75cc20a54
https://www.fas.org/sgp/crs/misc/R41743.pdf