Paradise Papers: How an island and Ireland aided Apple's megaprofits

Paradise Papers: How an island and Ireland aided Apple's megaprofits

Reports yesterday from a new release of documents from the "Paradise Papers" stated that Apple settled on Jersey as its tax refuge.

German newspaper Süddeutsche Zeitung received the documents and shared them with ICIJ and its media partners, including The New York Times, Australia's ABC, the BBC in the United Kingdom, Le Monde in France and CBC in Canada.

Apple CEO Tim Cook in May 2013 testified before Congress about his company's tax practices. "In fact, our payments to Ireland increased significantly and over the past three years we've paid $1.5bn in tax there - 7% of all corporate income taxes paid in that country", said an Apple statement.

Specifically, to avoid paying $9 billion in US corporate taxes in 2012, Apple allegedly used a strategy that involved rapid transfers of cash between three offshore units with no tax "residence".

But while the other two Irish companies took up residency in Jersey, Apple Operations Europe became tax resident in Ireland, the country of its incorporation.

Apple has come under fire for tax avoidance in the past, including drawing the ire of a bipartisan United States Senate committee that accused the company of seeking "the holy grail of tax avoidance".

Until 2014, Apple channelled sales outside of America through Irish companies, which kept taxes low.

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A company spokesman told the Times that the company told regulators in the US and European Commission of the reorganization of its Irish subsidiaries at the end of 2014 and said the moves did not reduce its tax payments in any country.

The paper said Apple has $US128 billion ($A179 billion) in offshore profits not taxed by the US. In particular, the paperwork revealed plans to expand an already generous tax regime for companies that bring intangible property into Ireland.

The head of the world's biggest technology company faced a grilling in Washington over what politicians there claimed were "gimmicks" used to get around USA tax laws. We do not depend on tax gimmicks. "The changes we made did not reduce our tax payments in any country". The selective treatment allowed Apple to pay an effective corporate tax rate of 1 percent on European profits in 2003, according to the commission a year ago.

Apple enlisted the Bermuda-based law firm Appleby to help it restructure its offshore tax scheme.

Lewis Hamilton, quadruple world champion of Formula One, resorted to a ghost society based on the Isle of Man to save more than 4 million euros in the VAT (taxes) for the purchase of a private jet of more than 18 million euros.

Congressional Republicans are also seeking to impose a 10 percent tax on some of the profit that USA businesses say is earned offshore - half the rate they are proposing for profit in the United States.

Apple paid nearly no tax on earnings of more than $100bn over four years, US Senator Carl Levin and former presidential candidate John McCain claimed, although Apple mounted a strong defence. The lawmakers have also proposed another break, permitting multinationals to bring home more than $2.6 trillion stowed offshore at sharply reduced tax rates.

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