1. olblueyez's Avatar

    Apple paid no UK corporation tax in 2012:

    Apple paid no UK corporation tax last year, filings show, despite all of its main British subsidiaries posting multi-million pound profits. The US technology giant used tax deductions from share awards to employees to help wipe out the corporation tax liabilities of its UK businesses.

    Accounts filed by one of Apple’s two main UK divisions, Apple Retail UK Ltd, showed the company made a pre-tax profit of £16m on sales of almost £1bn in the year to September 29.

    Another subsidiary, Apple (UK) Ltd, made a pre-tax profit of £43.8m on sales of £93m, according to accounts filed at Companies House, while a third, Apple Europe, made a pre-tax profit of £8m.

    However, the company offset tax deductions relating to share schemes of £27.7m against its corporation tax liabilities in the UK. The move also enabled it to claim a tax credit of £3.8m to carry forward to future years. Experts have also suggested Apple’s total sales in the UK are far higher, as many are logged elsewhere.

    In May, US senator Carl Levin accused Apple of of using "a complex web of offshore entities" to avoid paying taxes that equated to more than $1m (£657,000) per hour in lost revenue to the US.

    Tim Cook insisted that Apple, which has not acted illegally, paid "all the taxes we owe - every single dollar". Mr Cook said the company paid more than $6bn in tax last year.

    “We don’t depend on tax gimmicks,” Mr Cook told the Senate committee. “We don’t stash money on some Caribbean island.


    "I've never seen anything like this and we don't know anybody who has ever seen anything like this," Sen. Carl Levin (D-Mich.) said yesterday of Apple's baroque tax avoidance strategies. But Apple CEO Tim Cook, who will testify before the Senate Subcommittee on Investigations today, is* aggressively spinning what Levin called "gimmickry" as patriotic, commonsensical, and no big deal. Here are the most remarkable talking points from his pre-released Senate testimony:

    1. Apple's taxes are straightforward.
    Spin: "Apple does not use tax gimmicks."
    Reality: Yet somehow, according to an analysis by Citizens for Tax Justice, Apple has paid almost no income taxes to any country on its $102 billion in offshore holdings. Between 2009 and 2012, Apple avoided paying US taxes on some $74 billion in income, an amount equal to the entire budget of Florida.

    2. Paying American salaries through a subsidiary based in Ireland saves American jobs.
    Spin: Apple and its Irish subsidiaries are engaged in a "cost sharing agreement" whereby the subsidiaries "partially fund R&D costs incurred by Apple Inc." The agreements "play an important role in encouraging companies like Apple to keep R&D efforts in the US."
    Reality: This is how Apple brings back money from overseas without having to pay federal taxes on it.

    3. Apple is awesome because it runs huge data centers right here in the United States.
    Spin: "In 2010, Apple built one of the country's largest data centers in North Carolina, and it is in the process of constructing two additional data centers in Oregon and Nevada."
    Reality: Apple only agreed to build the North Carolina data center after getting a $46 million state tax break, its local property taxes halved, and* local taxes on its assets slashed by 85 percent—all for creating 50 jobs. To build its data center in deficit-plagued Nevada, it extracted an $88 million state tax break, the largest in state history. And Apple chose to build a data center in Prineville, Oregon, because Oregon has no sales tax and Prineville is in a "rural enterprise zone" that offers a 15-year property tax exemption.

    4. "Apple supports comprehensive corporate tax reform."
    Spin: "Apple recognizes that these and other improvements in the US corporate tax system may increase the company's taxes."
    Reality: Cook wants to reduce the tax that corporations pay when they repatriate profits, which could save Apple a lot of money considering that 61 percent of its profits are earned overseas. But lowering the repatriation tax probably wouldn't benefit most Americans. After Congress enacted a one-time repatriation holiday in 2004, a study by the National Bureau of Economic Research found that 92 percent of the repatriated cash was used to pay for dividends, share buybacks, or executive bonuses.

    Last edited by olblueyez; 07-01-13 at 06:38 AM.
    05-22-13 01:36 PM
  2. Omnitech's Avatar
    Outstanding post, thank you.

    I don't have some particular vendetta against Apple, I just think they're giant hypocrites who from a public/PR perspective, are always promoting warm/fuzzy "community values", and then turn around and undermine the communities of their employees and customers.

    When it comes to the general tax avoidance thing, various other companies are as bad or nearly as bad, including Google and Amazon.

    Many of these practices may be nominally legal in the USA, but it is a testament to the failure of government's role of advocacy for the individual citizenry that the US tax code allows them to stand.
    kbz1960 likes this.
    05-22-13 02:40 PM
  3. RubberChicken76's Avatar
    I don't get the sense the government can really do much here under the current legal definitions (would love for a lawyer to way in), but this may prompt them to change corporate tax laws.
    05-22-13 04:16 PM
  4. anon(1544756)'s Avatar
    U. S. Congress and Senate passed the loop holes that Apple, Microsoft, GE, and other corporations use to avoid paying Corp taxes. Instead of blaming the Corp for using legal loop holes. Fix the tax code first, then do the political theater.
    ekv, momofteme and Acumenight like this.
    05-22-13 05:21 PM
  5. wenuell's Avatar
    First I totally agree Apple paid every dollar legally required by law. Second, I think it's completely unfair they hide money to avoid taxes.

    Finally Congress can have their dog and pony show so they look like they are fighting for the average citizen. Then do nothing to change the tax laws. The blame does no lie with Apple. Blame Congress. They write the tax laws. If they wanted to write a fair tax code they could.

    Posted via CB10
    momofteme likes this.
    05-22-13 08:47 PM
  6. Omnitech's Avatar
    One of my big eye-openers was the lawsuit between craigslist and eBay a couple years ago.

    Back when craigslist was more naive than they are these days, they gave an informal stake in the company to 3 people, one of which turned out to be not particularly loyal to the company's best interests.

    As craigslist became a bigger and bigger phenomenon, this person decided to shop his shares around to see if he could make a lot of money off of it. Craig and Jim didn't anticipate this, especially when he picked eBay, of all organizations, as the buyer. Discussions ensued, eBay insisted up/down that they had craigslists best interests in mind (yeah right), and against their better judgement and after a big dog-and-pony-show put on by eBay, Craig and Jim decided not to contest it.

    By the by, eBay revealed its intentions to Borg craigslist, and it became increasingly apparent that they were engaging in hostile actions undermining craigslists business. The final nail was when they revealed kijiji, a competitive community-board blatantly modeled after craigslist. Craig and Jim adopted certain "poison pill" measures designed to dilute the influence eBay's share had over the organization that they had founded as a community service. eBay filed a lawsuit claiming breach of corporate duty etc etc.

    As it turns out, corporate law in the USA is HEAVILY weighted towards maximizing profit above all other matters. These laws vary from state to state, but in most states, if a shareholder claims that the corporate management has not done everything possible to maximize profits, above all other matters including serving the community in various ways, they can bring the management down.

    This was what happened in the craigslist case: it was a split judicial decision, but it would have been a slam-dunk for craigslist - a company founded on the primary mission of serving the community - if it weren't for the corporate laws that compelled them to prioritize profit-making above all other matters.

    It's amazing to me that only in the last few years has there finally been a movement to create a new form of corporate organization in USA states that might be generally referred-to as a "public benefit corporation". If that option had even existed at the time craigslist was incorporated, I'm 100% sure they would have chosen that route.

    So to me it's a testimony to US culture, where profit trumps all.
    sydsam likes this.
    05-22-13 09:34 PM
  7. web99's Avatar
    My whole take on this is that the Senate hearings on this issue is pointless. The government and its legislative branches in the Senate and Congress passed the very loopholes that Apple and other companies are using to their advantage. So as long as it is legal and within the law, Apple is just doing what is best for its bottom line and its shareholders.

    If they really wanted to solve this issue, they could close these loopholes. But my guess is that they will never do so as it will mean less campaign contributions from those with an interest of keeping those loopholes open.

    Having Tim Cook testify before the Senate Subcommittee is more of a show of feigned outrage and the appearance of doing something for public consumption.

    Posted via CB10 from my spectacular Z10
    Omnitech likes this.
    05-22-13 10:07 PM
  8. tmb2013's Avatar
    For all of the people on Crackberry that seem to be convinced that Apple has engaged in nefarious criminal activity and dodged taxes they should have paid, I have a question.

    Why do you suppose that Blackberry has incorporated a US sub in the State of Delaware? Surely one of the reasons couldn't be that Delaware has no state corporate income tax?

    No, I'm sure that's not it.
    05-22-13 10:09 PM
  9. Omnitech's Avatar
    For all of the people on Crackberry that seem to be convinced that Apple has engaged in nefarious criminal activity and dodged taxes they should have paid, I have a question.

    Why do you suppose that Blackberry has incorporated a US sub in the State of Delaware? Surely one of the reasons couldn't be that Delaware has no state corporate income tax?

    No, I'm sure that's not it.

    MOST large corporations seem to be incorporated in Delaware, for a variety of reasons.

    That does not mean that every single one of them is equally evil.

    craigslist is incorporated in Delaware too. The usual reason, for smaller businesses, is that the fees for incorporation are very inexpensive there. Delaware passed those laws specifically to attract that sort of business.

    The credit-card companies, on the other hand, are typically headquartered in South Dakota because SD lets them get away with all sorts of practices that credit-card issuers like to do. Like charge outrageous finance-charges on revolving debt.
    05-23-13 01:13 AM
  10. olblueyez's Avatar
    I just wanted to post this because it personifies why I'm not an Apple customer and because I hope people buying phones might consider this information with the awesome new Z10, Q10, and Q5 coming out.

    I'm glad to see the new models are utilize fantastic hardware because hardware can't be fixed with a patch. And the new models seem to live up to the legacy that propelled Blackberry to the top before the management issues.

    Any long time Blackberry fan knows a new phone will have some software related teething issues but with Heinz at the helm the updates are regular and often. For this reason I am still loving my 9900 and although some may consider the 9900 to be getting long in the tooth, I feel no pressure to get a new phone above and beyond the usual "I want a new toy" feelings.

    ~Awesome Hardware
    ~Necessary Fixes When You Need Them
    ~Company that Appreciates Their Customers
    ~Messaging Integration Second To None
    ~Product Designed To Appeal To Your Intellect & Not Your Laziness
    ~Non-Proprietary Accessories So You Don't Get Ripped Off
    ~True Leap-Frog Technology's Instead Of Repackaged Existing Tech Designed To Dig In Your Pocket At Christmas
    ~And I Must Say, All The Current And Especially The New Models Are Extremely Nice Looking!

    I'm sure I missed a few things but that's Ok. The Fans Will Chime In!

    As long as they keep making them I will keep using a Berry!

    The Chairman
    05-23-13 02:55 PM
  11. kfh227's Avatar
    This is all just a. If study into why America sucks.

    Posted via CB10
    05-23-13 04:58 PM
  12. Amy wineBerry's Avatar
    My interest in international taxation has led me to find out that all large companies do the same thing. I think the problem is that Apple's revenue is on a much larger scale. Google is pretty much on that level as well. The tax structures they have implemented as a means of deploying their tax shelters is phenomenal...and all legal.
    05-28-13 12:13 AM

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