Let’s remember this one, shall we?

Apple is being scrutinized by European officials, who accuse the company of using subsidiaries in Ireland to avoid paying taxes on revenue generated abroad. While Apple generates about 60 percent of its sales outside the U.S., its foreign tax rate is about 1.8 percent, according to Bloomberg Intelligence analyst Matt Larson.
“If the commission follows its own precedent” from recent cases “and effectively requires Ireland to impose the statutory tax rate, Apple will be looking at around 10 percentage points of tax on substantially more than a hundred billion dollars of profit from a decade of sweetheart deals,” said Alex Cobham, director of research at the Tax Justice Network.

The 1.8% rate we already know about as it’s actually pointed out in Apple’s own accounts.

But our test is whether Alex Cobham is full of shit or not. Because the Commission just ins’t investigating the thing that gives Apple that 1.8% tax rate (which is the way that IP is housed in Bermuda).

So, a bit of a bet, or at least throwing a marker down. If Apple loses this I think they’ll have to pay maybe €200 million to cover the decade. Alex Cobham, of the TJN, thinks they’ll pay $8 billion. March isn’t that far away so let’s wait and see, shall we?

19 thoughts on “Let’s remember this one, shall we?”

  1. Might be cleverer than you think. He’s set it up so that if it is the lower amount then it’s down to corporate lobbying

  2. Murphy has used Apple computer products for a considerable period of time. Perhaps some of them were even purchased from Amazon, given his acceptance of the usefulness of that site to sell his books.

  3. I’m sure in the end Apple will be found to have broken no laws but has done some marginal accounting. That is assuming the 1.8% is taxes on profits and not revenues.

    Slightly off topic but I still need to understand other’s thoughts on this. In the Citizens United case it was determined that corporations are people too, at least for campaign finance. Would it follow that if corporations are considers as individual people for campaign finance that means they must also be people for tax purposes?

  4. My Apple has added at least 1k more value to my life than the amount I paid for it. Many people will be like this. If they feel like contributing 20% of the profit or added value they’ve enjoyed from buying Apple product to the Exchequer there is nothing stopping them.
    I’ve found the most effective way to get a donation to the Exchequer is to buy petrol and drive to the shop that sells malt whisky ( without an e ).

  5. Bloke in Costa Rica

    My Mac/iPhone combo enables me to do my job so its added value to me is north of the $100000 mark.

    As for ‘imposing’ the tax on a decade’s worth of profits: since when did legislation become retroactive?

  6. ” In the Citizens United case it was determined that corporations are people too, at least for campaign finance.”

    That’s not what the Supreme Court said. It said that people don’t lose their 1st Amendment rights just because they organize themselves as a corporation.

  7. Blurring the lines between a business and a personal activity is very dangerous. While it is possible that someone may develop a better business structure than a corporation from this I feel it is much more likely that it will just lead to the further abuse of anything we could consider to be a campaign finance law.

  8. SBML – that’s the *other* corporate monolith in that article, no? Though I think your basic point stands as their numbers are similar.

    Presumably this payment is effectively insurance against later legal action that might try to demand more retroactive tax with menaces.

  9. Its making Tons of Dough using tricksy trickses using tricks.
    My biggest question still is… Given that all parties involved knew from the start Happy Ever After Really Doesn’t Last That Long…

    Who stands to gain, and who stands to lose. And what is it going to cost the rest of us.
    Seriously.. Corporate tax is …a mess.. I’m a simple bloke, operating on what I’ve got in my wallet, or rather the lack of it while the rest of the bigwigs seem to do all right.
    I do have this pitchfork, unfortunately “unsterilised”, though.

  10. @BiCR We all get that you love your Apple shiny, shiny. But are you really trying to claim that it would be completely impossible to do your job using Windows or Linux kit and that no other tool is required? Unless you’re an iPhone app developer, I find that hard to believe.

  11. Easy easy way, either no tax, or what ever you like with full imputation. Let’s say 30% corporate rate, and all dividends come with an additional 30% imputation credit for tax already paid on the owners behalf (of course the actual rate depends on what the company paid as a percentage, other taxation considerations might mean the pay only 25%, say).

    Then no arguments, and everyone pays the full amount of tax on their income. Dividends are grossed up with the imputation, you declare the full amount and claim the imputation credit. Gets rid of all this buggerizing around with lower rates for dividends which can be so misleadingly attacked, like Bernie Sanders is doing.

  12. @HallowedBe it is a delusional faith amongst lefties that there is, somehow, somewhere, some magic bucket of money – made up usually of ‘tax avoidance’ by rich people and corporations, and ‘tax benefits’ which aren’t necessary that will somehow produce £150bn plus a year extra, and it’s only corruption/bribery etc. that stops it appearing.

    Kinda begs the question why no prior chancellor has done it.

  13. @SadButMadLad they will whine about it being a sweetheart deal, Ronald McDonnell has already compared it to Vodaphone.

    I’ve yet to meet anyone who wittered on about evil Vodaphone who understands what CFCs are, or anything like that.

    Mind you, most of them don’t understand how the Single European Market works.

  14. Paul, well, Corporations do have the means and the incentive to arrange things to (legally) pay as little tax as possible. And yes most do that in a way that’s just not an option for individuals of average means aka your average voter. That much isn’t made up. If an average individual wants to as significantly reduce the tax they hand over to HMG they have to bend the law and keep schtum. That’s where the tension is. ‘Tax efficiency’ is either seen as big guy unfair advantage or just conflated with the grafters. Hard for big corps to get any sympathy, which is why corp tax exists in the first place of course. The antidote is more general knowledge about the effect of corp taxation on jobs and income levels. Tim, blue as his face is on this subject, isn’t quite maintstream yet. Yes lobbyists can put these points to decision makers to a certain extent but with the underlying tension there in the electorate it’s going to be exploited by haymaking politicians.

  15. Bloke in Costa Rica;

    As for ‘imposing’ the tax on a decade’s worth of profits: since when did legislation become retroactive?

    That would be the war crimes trials immediately after WW2. The Axis people must be punished, lets create crimes after the fact.

  16. That’s not what the Supreme Court said. It said that people don’t lose their 1st Amendment rights just because they organize themselves as a corporation.

    Correct. If one takes the position that corporations have no constitutional rights, it follows that Congress has ability to pass legislation limiting what the New York Times, Washington Post, etc can publish, since those are corporations. A statute requiring, say, all corporate-owned newspaper articles to be approved by a government censor would be perfectly constitutional under this interpretation.

  17. Ah, @HallowedBe, no problem with you there. I’ve no doubt there is fiddling and so on going on. It’s just not at the colossal level required to unpick the deficit and support Labour’s extra spending is McDuffer thinks.

    I had some numpty telling me the other day that UK tax avoidance was £150bn and if all the evil corporations paid it then we’d have no deficit. Ignoring the ridiculous level, the practicalities of collecting it, and the fact that a large chunk of it is cash in hand stuff …. it’s like talking to a wall.

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