Apple’s secret tax loophole revealed

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The world’s most profitable company, has a mysterious new structure would enable it to continue to avoid billions in taxes, the Paradise papers.

They show how Apple bypassed the 2013 crackdown on the controversial Irish tax practices by actively shopping around for a tax haven.

The company then moved the most of his inability to keep controlled offshore cash, now $252bn, the channel island of Jersey.

Apple said the new structure had not reduced taxes.

He said it is the world’s largest taxpayer remained, the payment of over $35bn (£26bn) in the corporate income tax in the last three years, that it was not followed, the law and its changes “to reduce our tax payments in any country”.

The Paradise papers is the name for a huge leak of financial documents that sheds light on the world of offshore Finance.

Until 2014, the tech-company had the advantage of a loophole in the tax laws in the United States and the Republic of Ireland, known as the “double Irish”.

This allows Apple to funnel all of their sales outside of America, currently about 55% of its revenue through Irish subsidiaries that were effectively free States for tax purposes, and so it hardly suffered any taxes.

Instead of paying the Irish corporate tax of 12.5% or the U.S. rate of 35%, Apple’s avoidance structure helped it reduce its tax rate on profits outside of the United States to the extent that its foreign tax payments amounted rarely to more than 5% of the foreign profits, and in a few years, dipped below 2%.

The European Commission calculates the rate of the tax for one of Apple’s Irish companies for a year, was only 0.005%.

Apple came under pressure, was forced in 2013 to the U.S. Senate, when CEO Tim Cook to defend tax system.

Annoying that we have been missing on a huge amount of tax, then-Senator Carl Levin said to him: “you are the Golden goose relocated to Ireland. You shifted it to three companies that do not pay taxes in Ireland. These are the crown jewels of Apple Inc. People, it’s not.”

Mr Cook responded defiantly: “We pay all the taxes we owe, every single dollar. We don’t depend on tax gimmicks. We are not money bunkers on some Caribbean island.”Apple Questionnaire

After the EU announced in 2013 that Apple was Irish investigated ‘ s Assembly, which decided the Irish government, the companies involved, there are no more States for tax purposes.

Your tax rates are low, the Apple needed to find an offshore financial centre, as the tax residence of its Irish subsidiaries.

In March 2014, Apple’s legal consultants, a questionnaire sent to Appleby, one of the leading offshore law firm and the source of much of the Paradise-expire papers.

He asked, what are the advantages of other offshore jurisdictions – the British Virgin Islands, Bermuda, the Cayman Islands, Mauritius, Isle of Man, Jersey and Guernsey could offer Apple.

The document asked key questions how it was possible, “will receive an official assurance of tax exemption”, and it could be confirmed that an Irish company could “conduct management activities… without being subject to tax in their jurisdiction”.

You will also be asked whether a change of government was likely to be what information is visible to the public and how easy it would be to leave jurisdiction.Source Document: Apple-Questionnaire (Excerpt)

Leaked E-Mails also make it clear that Apple wanted the move secret.

An E-Mail sent between a senior Partner at Appleby says: “For those of you who don’t know, Apple [officials] are extremely sensitive about publicity. It is expected that the work will be done, will be discussed only between staff, need to know.”

Apple chose Jersey, a British crown dependency which makes its own tax laws, and the has a 0% tax rate for foreign companies.

Paradise papers, documents show Apple the two main Irish subsidiary, Apple Operations International (AOI), probably the most of Apple’s massive $252bn foreign cash to keep hoarding, and Apple Sales International (ASI), were administered by Appleby’s office in Jersey from the beginning of 2015 to early 2016.

This Apple would have allowed it to continue to billion avoid taxes around the world.

Apple 2017 accounts showed they made $44.7 bn outside the US and paid only $1.65 billion Euro in the Form of taxes to foreign governments, a rate of around 3.7%. This is less than a sixth of the average rate of corporate tax in the world.

Apple and Ireland vs EU

Massive GDP spike

If the “double-Irish” loophole was closed, also in Ireland, created new tax provisions that could benefit companies such as Apple.

One of the companies that Apple moved to Jersey, ASI, had rights to some of Apple Inc extremely valuable intellectual property.

If he sold the intellectual property back to an Irish company, the Irish company would be able to compensate for the enormous costs against any future profits. And because the IP holder, ASI, was registered in Jersey, the profits of the sale would not be taxed.

It seems, Apple has done just that. It was an exceptional 26% spike in Ireland, the GDP in the year 2015, the reports of the media, and to move the intellectual property in Ireland. The intangible assets rose by a massive €250bn in Ireland this year.

The Irish Ministry of Finance denied that the new legislation was brought in to benefit multi-national corporations.

He said Ireland was not to assert “clearly in the company, capital allowances on intangible assets” and the international standard was followed.

Apple rejected moves answers to the questions, through its two subsidiaries, their tax residency to Jersey.

Also declined to comment on the question of whether one of these companies had contributed to a large tax depreciation due to the sale of intellectual property.

Apple said: “If Ireland changed its tax laws in 2015, we have been met by a change in the residency of our Irish subsidiaries, and we are informed, to Ireland, of the European Commission and the United States.

“The changes that we do not reduce our tax payments in any country. In fact, our payments to Ireland increased significantly in the last three years, we have paid $1.5 billion in tax there is.”

The papers are in a huge stack of leaked documents, the most of offshore law firm Appleby, together with the corporate registry in the 19 control areas, which show the financial transactions of politicians, celebrities, corporations and business leaders.

The 13.4 million records have been handed over to a German newspaper, the Süddeutsche Zeitung and then, together with the International consortium of Investigative journalists (ICIJ). Panorama research for the BBC has led, as part of a global survey with nearly 100 other media organisations, including the Guardian, in 67 countries. The BBC do not know the identity of the source.

Paradise papers: Full coverage; follow the reaction on Twitter with #Paradise papers; in the BBC News app, follow the day – “the Paradise papers”

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