A report published on Monday by different media about how different companies and subjects evade taxes in tax havens, pointed directly to Apple and its move to the Isle of Jersey in the English Channel . An island belonging to the British Crown but not to the United Kingdom (nor to the European Union). Has Apple gone from taxing in Ireland to taxing on this island to avoid taxes?
Apple has published a statement explaining its reorganisation to leave Ireland with its tax subsidiaries. The company reportedly communicated to both the United States and the European Commission and to Ireland its intention to move here in 2015, when Ireland changed the rules of the game. Apple has sought to clarify three important points :
- The changes they made in the organization of their tax structure have been made to maintain the payment of taxes in the United States and in no way reduce them.
- The company pays millions of dollars in taxes in the United States, meeting 35% of the income from abroad.
- The foreign tax paid by the company is 21%, and this can be easily verified by looking at the company’s public financial results.
Apple’s tax rate in recent years. According to them, it is 24.6% on average.
In other words, Apple’s move has been not so much to evade taxes but to continue paying them to the United States . Apple has been trying to accumulate them outside the United States while waiting for the approval of a Tax Holiday. That is, a lowering of the tax rate on repatriation of profits outside the U.S., something that is being discussed in the Trump administration. Therefore, the debate moves from “whether or not you pay taxes” to “whether you pay them where they should be”.
The real dilemma: where to pay taxes
By a common consensus, each company or subject must pay taxes where the value is created , that is, where the company operates. With a multinational operating in dozens of countries and generating different value in each of them, it is more complex.
Ireland has been the home of Apple for years to operate in Europe.
Apple designs in the U.S., manufactures in China and other Asian countries, and sells worldwide. Where is it creating value for its business? According to them, the greatest value of all is created in the United States, where most engineers are located and where products are designed. That’s why they try to direct taxes as much as possible to the American country. But besides this, it is obvious that they generate value in other countries, that is why they also pay the IBI and generate the VAT, Income Tax and Social Security for their employees and other taxes associated with their activity.
Because each country or regulatory commission has laws and rules for their regions, Apple and the rest of the companies can play with it to pay the least amount possible always within the law. As the European Union allows companies to operate in any country of the European Union if your company is in one of them, Apple decided to create its subsidiary in Ireland, which is the country that applies the lowest taxes in the European Union. Done with the law, done with the trap.
In recent years, Apple has become the largest company in the world. If we look at its market capitalization, in a matter of time it will exceed $1 trillion. Consequently, it is also the world’s largest taxpayer , with over $35 billion in corporate taxes in the last three years.
Apple’s revenue, profits, and taxes in recent years.
As long as there is no global tax system, conflicts will continue to exist. Why is Apple trying to move its taxes to the United States? Last year, US authorities expressed concern about Europe’s attempts to collect taxes that they claim belong to them. It is therefore a reaction that undoubtedly has repercussions for all involved .