The public got a rare glimpse into the method Apple uses to minimize its global taxes – during a series of exchanges between the company’s top executives and members of the U.S. Senate on Tuesday, May 21st.
It was also revealed this week thatApple owns Apple Operations International (A.O.I.), Apple Operations Europe (A.O.E.) and Apple Sales International (A.S.I.) – three subsidiaries based in Ireland.
They are profitable. For instance, A.O.I reported it earned some $30 billion in income over four years, but has no employees nor has it “filed an income tax return in any country for the last five years,” The Los Angeles Times reported, based on information released by the Senate's Permanent Subcommittee on Investigations. Also, A.S.I. “holds the economic rights to Apple's intellectual property in Europe, Asia and Africa. The subsidiary had $74 billion in sales income from 2009-2012 but paid less than 1% in taxes to Ireland,” the report adds.
Several senators have claimed that Apple uses the subsidiaries in Ireland to shield billions of dollars in income from U.S. taxes.
“That’s the golden goose, your crown jewels” Senator Carl Levin (D-Mich.) told top Apple executives, adding that Apple has $100 billion in profit between those three companies.
“You shifted the economic rights to the most valuable thing you own, intellectual property [to the Irish corporation],” Levin told the executives, news reports said. “That’s the facts. And now those profits are abroad.”
But Tim Cook, Apple’s CEO, defended company policies and claimed the company is paying every dollar it owes in taxes.
“Apple complies fully with both the laws and spirit of the laws. And Apple pays all its required taxes, both in this country and abroad,” Cook claims in a prepared statement that was released on the night of May 20th and read into the record on the 21st.
“In my view A.O.I. does not reduce U.S. taxes at all,” Cook added in response to a series of questions from Levin.
Also, Cook noted that “from a practical point of view” A.O.I, A.O.E. and A.S.I. are functionally managed and controlled in the United States, the Apple executives said.
“We have significant employees in Ireland of about 4,000. So there’s significant amount of discussions and leadership and negotiations that go on in Ireland. But most of the strategic ones do take place in the United States,” Cook explained in his testimony.
Yet, Levin claims that two-thirds of Apple’s profits are in Irish companies.
“That’s because of the way we set ourselves up 30 years ago,” Peter Oppenheimer, Apple’s chief financial officer, responded.
“The only reason you’re not bringing them home is because they were transferred to these three Irish companies,” Levin said. “That’s the reason why they’re there. It’s your decision not to bring those profits home, so now $100 billion plus is stashed away in those three Irish companies that you control but is nonetheless in their legal name. The question is, will you bring them home?”
Will Apple return the profits back to the United States?
“I have no current plan to bring them back at the current tax rate,” Cook testified.
Also, in response to another question, Cook said he wants to see the U.S. government update the federal tax code – which he says would lead to more jobs and investment.
People spend more and more time on their smartphone nowadays and it's no wonder. You can do some shopping, check your email, and even visit real money…
Bitcoin was launched as a purely digital currency at the turn of the decade but soon after, physical bitcoins were introduced into the market. While p…
Patch management plays a crucial role in the security of any business enterprise. Insufficient patch management can leave a business system vulnerable…
Is your email inbox slowing you down and keeping you from getting your work done? It's time to outsmart and take control of your inbox.
For most people, freedom is best utilized with a combination of other things. Researchers have also revealed that people today fancy a busy and overwo…