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Apple publishes execs' opening statements from US Senate testimony - Page 2

post #41 of 89
Quote:
Originally Posted by digitalclips View Post


It seems, like Levine and McCain you totally ignore the repeated testimony by Apple that the sales occur in the various countries in Europe where the appropriate taxes are paid on those profits. The net proceeds are then transferred to Ireland.

What part of 'the income has already been taxed' are you missing? Do you think countries like Britain would allow Apple UK to collect revenues from sales tax free?

 

You've misinterpreted what happens, I think Tim Cook was quite disingenuous about this.  

 

Apple Operations International (Ireland) buys iPhones from Apple, or Foxconn in China at cost.  Apple Operations International then sells those iPhones to Apple UK, Apple Germany, Apple France etc for close to the retail price.  The local Apple Incs then sell the iphones to consumer or carriers.  The local Apple Incs will pay sales tax, will have some staffing so will pay payroll taxes, but the amount of profit they book for selling iPhones will be absolutely minimal, and corporate tax for the local Apple Inc will also be minimal.

 

Apple Operations International meanwhile books Scrooge McDuck level of profit, since they sold the iPhones for so much more than they bought them, when it actually hasn't done anything in the real world.  The iPhones were shipped from Foxconn to the local Apple Incs, AOI had no hand in anything except as a nebulous "owner" of the products for a short while.  They have no staff, they have no overheads, and since through a curiosity of Irish Law they aren't "controlled" from within Ireland, they don't have to pay any corporation tax there.

 

Apple as a holistic entity has pretty much avoided paying any corporation tax in the EU.  And it's entirely legal, which is why Tim cook is able to say that Apple pays all of its tax obligations with a straight face.

 

 

In answer to your question about whether Britain would allow this, Britain is basically king of the hill when it comes to allowing tax haven abuse.  This country sold out to multinationals many years ago.  Yes, we would allow this, we are allowing this, and under current policy directions it looks like it's only going to get worse. 

 

 

*Obviously where I've said iPhones in the narrative above, you can take it to mean any Apple hardware product.

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post #42 of 89

Forbes has a nice article about how well Tim Cook did in representing Apple's position while under fire from the Senate committee.

http://www.forbes.com/sites/carminegallo/2013/05/21/its-important-to-tell-our-story-5-ways-apples-tim-cook-stayed-cool-under-fire/

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post #43 of 89
Quote:
Originally Posted by Crowley View Post

Apple Operations International meanwhile books Scrooge McDuck level of profit...

 

Do you expect anyone to take you seriously when you say stupid shit like this?

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post #44 of 89
Quote:
Originally Posted by Crowley View Post

You've misinterpreted what happens, I think Tim Cook was quite disingenuous about this.  

Apple Operations International (Ireland) buys iPhones from Apple, or Foxconn in China at cost.  Apple Operations International then sells those iPhones to Apple UK, Apple Germany, Apple France etc for close to the retail price.  The local Apple Incs then sell the iphones to consumer or carriers.  The local Apple Incs will pay sales tax, will have some staffing so will pay payroll taxes, but the amount of profit they book for selling iPhones will be absolutely minimal, and corporate tax for the local Apple Inc will also be minimal.

I'd like to see your evidence for this. For that matter, I'd like to see your evidence for ANY of the ridiculous claims you make.

You're talking about transfer pricing. Transfer pricing is regularly audited by the IRS and there are strict rules about how the transfer price must be set. If the IRS thinks Apple's transfer price is incorrect, they can challenge it. They have not done so. Furthermore, if the amount of profit Apple books in the US for selling iPhones is so small and if AOI sells the phones to Apple US for close to retail, how did they end up with $20 B in profits and $6 B in tax liability in the US?
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Gatorguy 5/31/13
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post #45 of 89

This is not about the US, this is about the EU and Ireland.  Nowhere in the comment above have I even mentioned the US.

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post #46 of 89
Quote:
Originally Posted by Crowley View Post

You've misinterpreted what happens, I think Tim Cook was quite disingenuous about this.  

Apple Operations International (Ireland) buys iPhones from Apple, or Foxconn in China at cost.  Apple Operations International then sells those iPhones to Apple UK, Apple Germany, Apple France etc for close to the retail price.  The local Apple Incs then sell the iphones to consumer or carriers.  The local Apple Incs will pay sales tax, will have some staffing so will pay payroll taxes, but the amount of profit they book for selling iPhones will be absolutely minimal, and corporate tax for the local Apple Inc will also be minimal.

Apple Operations International meanwhile books Scrooge McDuck level of profit, since they sold the iPhones for so much more than they bought them, when it actually hasn't done anything in the real world.  The iPhones were shipped from Foxconn to the local Apple Incs, AOI had no hand in anything except as a nebulous "owner" of the products for a short while.  They have no staff, they have no overheads, and since through a curiosity of Irish Law they aren't "controlled" from within Ireland, they don't have to pay any corporation tax there.

Apple as a holistic entity has pretty much avoided paying any corporation tax in the EU.  And it's entirely legal, which is why Tim cook is able to say that Apple pays all of its tax obligations with a straight face.


In answer to your question about whether Britain would allow this, Britain is basically king of the hill when it comes to allowing tax haven abuse.  This country sold out to multinationals many years ago.  Yes, we would allow this, we are allowing this, and under current policy directions it looks like it's only going to get worse. 


*Obviously where I've said iPhones in the narrative above, you can take it to mean any Apple hardware product.

Well that would be a clever tactic if true. I would like to see your proof Apple Ireland does what you say. I for one would be surprised if it is the case. Tim's repeated assertion that the individual Apple HQs throughout Europe pay all their taxes would be disingenuous to an extreme to be sure and I would have thought very dangerous in front of a Senate hearing. I just can't believe Tim would put himself in that position.

So to be clear you are stating with certainty Apple UK, to take one example, purchases all it's Apple products from Ireland at almost full retail thus making zero profit in the UK. Does Apple UK publish its financials so we can see this?
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post #47 of 89

It's pretty comprehensively covered in the Senate Hearing Report: http://www.hsgac.senate.gov/subcommittees/investigations/hearings/offshore-profit-shifting-and-the-us-tax-code_-part-2

 

Business Insider have written it up in an easy to understand report: http://www.businessinsider.com/how-apple-reduces-what-it-pays-in-taxes-2013-5

 

 

Not much of this is new information by the way, it was covered extensively in the British press last November: 

http://www.bbc.co.uk/news/business-20197710

http://www.telegraph.co.uk/finance/newsbysector/mediatechnologyandtelecoms/9653961/Apple-pays-less-than-2pc-tax-on-overseas-profits.html

http://www.guardian.co.uk/technology/2012/nov/04/apple-paid-low-overseas-tax

 

It's not hard to find plenty more articles from left-wing and right wing sources

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post #48 of 89
Quote:
Originally Posted by MJ1970 View Post

 

Do you expect anyone to take you seriously when you say stupid shit like this?

 

People are getting a little flustered it seems, I thought a little brevity might lighten the tone.  Apologies if its not to your tastes, we all have a different sense of humour.

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post #49 of 89
Originally Posted by Crowley View Post
People are getting a little flustered it seems, I thought a little brevity might lighten the tone.  Apologies if its not to your tastes, we all have a different sense of humour.

 

Your "brevity" is on the order of

 

"My cat died."

"What a cat-astrophe!"

 

Just gonna copy/paste from Gatorguy's signature now:

 

"No theatrics and no more personal attacks, just stick to the logic and tell me why I don't have any argument"

Originally Posted by helia

I can break your arm if I apply enough force, but in normal handshaking this won't happen ever.
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Originally Posted by helia

I can break your arm if I apply enough force, but in normal handshaking this won't happen ever.
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post #50 of 89

One throwaway reference to Duck Tales was a theatric?  Wow, your stage drama class must have been dull as hell.

 

I haven't made any personal attacks, that's entirely been you and the defenderati gang, and I haven't noticed you making any argument yet, so I'm not sure how I can respond.

 

Throw me a bone here.

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post #51 of 89
Originally Posted by Crowley View Post
One throwaway reference to Duck Tales was a theatric?  Wow, your stage drama class must have been dull as hell.

 

I haven't made any personal attacks, that's entirely been you and the defenderati gang, and I haven't noticed you making any argument yet, so I'm not sure how I can respond.

 

Throw me a bone here.

 

You need to be blocked from posting in the tax threads.

Originally Posted by helia

I can break your arm if I apply enough force, but in normal handshaking this won't happen ever.
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Originally Posted by helia

I can break your arm if I apply enough force, but in normal handshaking this won't happen ever.
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post #52 of 89

Sigh. Dissenting opinions must be silenced, hey?

 

Disappointing that you'd even suggest that.

 

If you don't like what I'm writing, ignore it.  It's easy.

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post #53 of 89
Originally Posted by Crowley View Post
Dissenting opinions must be silenced, hey?

 

No, just lies.

Originally Posted by helia

I can break your arm if I apply enough force, but in normal handshaking this won't happen ever.
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Originally Posted by helia

I can break your arm if I apply enough force, but in normal handshaking this won't happen ever.
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post #54 of 89

Where have I lied?  I haven't intended to lie anywhere, but I may have written something in error, and I'll apologise if that's the case.  Please point out where you think I've said something false.

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post #55 of 89
Quote:
Originally Posted by Tallest Skil View Post

 

… Having subsidiaries in the countries in which it does business.

 

OOOHOOHOOHOOOOOO, so absurd¡

 

Take the rest of your political crap to PO.

 

Quote:
Originally Posted by Tallest Skil View Post

 

Your "brevity" is on the order of

 

"My cat died."

"What a cat-astrophe!"

 

Just gonna copy/paste from Gatorguy's signature now:

 

"No theatrics and no more personal attacks, just stick to the logic and tell me why I don't have any argument"

 

Quote:
Originally Posted by Tallest Skil View Post

 

You need to be blocked from posting in the tax threads.

Why are you having a go at Crowley?  The above quotes have been your sum total input to this thread.  Crowley, on the other hand, has provided facts backed up by evidence.  Maybe if you tried to discuss things with him instead of making pointless comments these forums might by a better place to be.

post #56 of 89
Originally Posted by reefoid View Post
The above quotes have been your sum total input to this thread.  Crowley, on the other hand, has provided facts backed up by evidence.

 

Tends to get confusing when they split it between ten threads.

 

Facts, huh.

Originally Posted by helia

I can break your arm if I apply enough force, but in normal handshaking this won't happen ever.
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Originally Posted by helia

I can break your arm if I apply enough force, but in normal handshaking this won't happen ever.
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post #57 of 89

I agree with you there, I'd prefer if there was only one thread.  Or maybe two, one for the US repatriation issue and one for the EU avoidance issue, as I think there's been confusion between parties about what issue is being talked about.

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post #58 of 89
Quote:
Originally Posted by digitalclips View Post

It seems, like Levin and McCain you totally ignore the repeated testimony by Apple that the sales occur in the various countries in Europe where the appropriate taxes are paid on those profits. The net proceeds are then transferred to Ireland.

They said what they paid in income taxes - $900m, which is significantly below the Corporate Income Tax rates where they sell products. A 25% rate on their foreign profits is over $6b.
Quote:
Originally Posted by digitalclips View Post

What part of 'the income has already been taxed' are you missing?

What you guys seem to be missing is that it has almost not been taxed at all - nowhere near the rate it should have been taxed. Tim calls it 'appropriate' but that's subjective. It doesn't get taxed again exactly because they get dollar for dollar tax credits against what they pay abroad.

Apple's argument is essentially that they've gone to all the trouble of avoiding paying taxes to foreign governments that paying repatriation would completely undo that effort. If they'd paid the 25% that they were supposed to, their repatriation rate would be 10%. If the US tax code matched the rest of the world at 25%, they'd pay 0% repatriation so long as they pay what they are due elsewhere.

Companies would rather avoid paying Corporation Tax altogether because that's the only real tax they suffer for. Employment taxes are taken from employees and sales tax is paid by customers. Property tax is small to a company like Apple:

"Oppenheimer: We paid $325m in federal employment taxes, in addition to our employees. We've paid $100 million to state and local governments in property taxes and other fees. Last year, we collected and remitted $1.3 billion in sales tax."

US revenues in 2012 were $57.5b so $1.3b is 2.2% effective sales tax. The US average was around 9.6%:

http://www.forbes.com/sites/williampbarrett/2012/02/02/average-u-s-sales-tax-rate-drops-a-little/

Sales tax is calculated based on shipping address through Apple's online store. Maybe they just get a lot of customers in Delaware or Oregon.
Quote:
Originally Posted by digitalclips View Post

Do you think countries like Britain would allow Apple UK to collect revenues from sales tax free?

They said they paid overseas income tax, employment tax, sales tax and property tax all of which they are due to pay. They didn't disclose figures about the last 3 but made it clear the income tax is significantly below what it should be and you have to remember that it's customers that pay the sales tax directly, most of whom have no choice but to pay income tax at the full rate.

As Levin correctly pointed out, companies don't have the right to decide how much of each tax they should be paying. Customers don't get to decide how much sales tax to pay and their income tax is taken before they get their pay. The lowest earners and small businesses have little to no choice in the rates they pay but all of the big earners have lots of options and take advantage of them. The options should be eliminated but the options aren't always there for the purposes they are being used for so they add conditions and people find creative ways to get round the conditions and so on.
post #59 of 89
Quote:
Originally Posted by Crowley View Post

I agree with you there, I'd prefer if there was only one thread.  Or maybe two, one for the US repatriation issue and one for the EU avoidance issue, as I think there's been confusion between parties about what issue is being talked about.

I'm still waiting for a response please (see a wee bit earlier up the page).
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post #60 of 89
Quote:
Originally Posted by Marvin View Post

They said what they paid in income taxes - $900m, which is significantly below the Corporate Income Tax rates where they sell products. A 25% rate on their foreign profits is over $6b.
What you guys seem to be missing is that it has almost not been taxed at all - nowhere near the rate it should have been taxed. Tim calls it 'appropriate' but that's subjective. It doesn't get taxed again exactly because they get dollar for dollar tax credits against what they pay abroad.

Apple's argument is essentially that they've gone to all the trouble of avoiding paying taxes to foreign governments that paying repatriation would completely undo that effort. If they'd paid the 25% that they were supposed to, their repatriation rate would be 10%. If the US tax code matched the rest of the world at 25%, they'd pay 0% repatriation so long as they pay what they are due elsewhere.

Companies would rather avoid paying Corporation Tax altogether because that's the only real tax they suffer for. Employment taxes are taken from employees and sales tax is paid by customers. Property tax is small to a company like Apple:

"Oppenheimer: We paid $325m in federal employment taxes, in addition to our employees. We've paid $100 million to state and local governments in property taxes and other fees. Last year, we collected and remitted $1.3 billion in sales tax."

US revenues in 2012 were $57.5b so $1.3b is 2.2% effective sales tax. The US average was around 9.6%:

http://www.forbes.com/sites/williampbarrett/2012/02/02/average-u-s-sales-tax-rate-drops-a-little/

Sales tax is calculated based on shipping address through Apple's online store. Maybe they just get a lot of customers in Delaware or Oregon.
They said they paid overseas income tax, employment tax, sales tax and property tax all of which they are due to pay. They didn't disclose figures about the last 3 but made it clear the income tax is significantly below what it should be and you have to remember that it's customers that pay the sales tax directly, most of whom have no choice but to pay income tax at the full rate.

As Levin correctly pointed out, companies don't have the right to decide how much of each tax they should be paying. Customers don't get to decide how much sales tax to pay and their income tax is taken before they get their pay. The lowest earners and small businesses have little to no choice in the rates they pay but all of the big earners have lots of options and take advantage of them. The options should be eliminated but the options aren't always there for the purposes they are being used for so they add conditions and people find creative ways to get round the conditions and so on.

I am ready to accept any scenario based on proof. Do you have access to a link for the Apple UK financials showing almost no tax on sales due to purchasing from Ireland at almost retail prices as some here are claiming. I have to see this for myself.

On your point about individuals tax options (last paragraph) I would have to say it seems Americans have many, many options. Raging in extremes from living of earned interest alone to driving to New Hampshire to buy something. Plus those of us that are self employed don't have income taxes removed up front. Just saying ... 1smile.gif
Edited by digitalclips - 5/22/13 at 10:24am
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post #61 of 89
Quote:
Originally Posted by digitalclips View Post


I'm still waiting for a response please (see a wee bit earlier up the page).

 

 

Does the post underneath yours not satisfy this?

 

Apple Inc doesn't do any country-by-country reporting to my knowledge.  It would be very helpful if they did.

 

if you need more, I'll do my best, but as is the nature with tax havens and transfer pricing, the details can be hard to pin down; that's why we have things like Senate Hearings to draw them out 1wink.gif

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post #62 of 89
Quote:
Originally Posted by Crowley View Post


Does the post underneath yours not satisfy this?

Apple Inc doesn't do any country-by-country reporting to my knowledge.  It would be very helpful if they did.

if you need more, I'll do my best, but as is the nature with tax havens and transfer pricing, the details can be hard to pin down; that's why we have things like Senate Hearings to draw them out 1wink.gif

OK thanks. I must admit I was unaware every country in Europe Apple sells out if was a tax haven. I picked the UK at random. Anyone showing a pass through at no markup from Apple Ireland would suffice for now. By the way I personally wrote gazillions worth of checks (sorry cheques) to Apple UK over the years having owned and run several large dealerships. So I am doubly curious about this.
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post #63 of 89
Quote:
Originally Posted by Crowley View Post

Apple Inc doesn't do any country-by-country reporting to my knowledge.  It would be very helpful if they did.

 

Helpful for whom?

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post #64 of 89
Quote:
Originally Posted by digitalclips View Post

I am ready to accept any scenario based on proof. Do you have access to a link for the Apple UK financials showing almost no tax on sales due to purchasing from Ireland at almost retail prices as some here are claiming. I have to see this for myself.

I don't remember anyone claiming that. The main issue is income tax not sales tax. If you wanted to check up on their sales through Ireland, the details would be in their annual returns to one of their subsidiaries. Apple Sales International returns are here:

http://www.cro.ie/search/ListSubDocs.aspx?id=157192&type=C

There's a company called Apple Dome Management:

http://www.cro.ie/search/CompanyDetails.aspx?id=336784&type=C

That must be to prevent Apple becoming domed. A surprising number of people get away with using the name Apple. Apple's ones appear to all be registered in Hollyhill so they'd be:

Apple Distribution International:
http://www.cro.ie/search/CompanyDetails.aspx?id=470672&type=C
Apple operations:
http://www.cro.ie/search/CompanyDetails.aspx?id=492405&type=C
Apple Operations Europe:
http://www.cro.ie/search/CompanyDetails.aspx?id=76927&type=C
Apple Operations International:
http://www.cro.ie/search/CompanyDetails.aspx?id=76941&type=C
Apple Retail Holding Europe:
http://www.cro.ie/search/CompanyDetails.aspx?id=379311&type=C
Apple Sales Ireland:
http://www.cro.ie/search/CompanyDetails.aspx?id=86705&type=C
Apple Sales International:
http://www.cro.ie/search/CompanyDetails.aspx?id=157192&type=C

(none of those links work directly, just search for Apple and you can click through)

Levin said that ASI received $70b over the last few years and $30b of that given to AOI, which is a holdings company used to invest profits so not liable for anything other than income tax on the interest, which they pay at the US rate. Avoiding non-US income taxes would be done either by ASI or the subs that give them money. They said unapologetically that their overseas income tax rates are extremely low and paid just $900m despite their profits being higher than in the US.

This is where some of the senators were happy (Johnson mostly) because it means the possibility of taking profits from foreign countries and bringing them back to the US without paying the foreign governments the taxes on them. Apple just doesn't want to give the US government such a big chunk - they want to give them less than 10%.
post #65 of 89
Me, so I can answer the question. Tax authorities too no doubt.

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post #66 of 89
Quote:
Originally Posted by Crowley View Post

Me, so I can answer the question. Tax authorities too no doubt.

 

Unless you're investor, then it's only curiosity. For the tax authorities, the only reason is so they can pick their pocket better.

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post #67 of 89
Quote:
Originally Posted by MJ1970 View Post

Unless you're investor, then it's only curiosity. For the tax authorities, the only reason is so they can pick their pocket better.
That's a perjorative way of putting it. One might also say that the authorities would be better served by the transparency to regulate effectively and ensure appropriate tax is paid.

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post #68 of 89
Quote:
Originally Posted by Marvin View Post

I don't remember anyone claiming that. The main issue is income tax not sales tax. If you wanted to check up on their sales through Ireland, the details would be in their annual returns to one of their subsidiaries. Apple Sales International returns are here:

http://www.cro.ie/search/ListSubDocs.aspx?id=157192&type=C

There's a company called Apple Dome Management:

http://www.cro.ie/search/CompanyDetails.aspx?id=336784&type=C

That must be to prevent Apple becoming domed. A surprising number of people get away with using the name Apple. Apple's ones appear to all be registered in Hollyhill so they'd be:

Apple Distribution International:
http://www.cro.ie/search/CompanyDetails.aspx?id=470672&type=C
Apple operations:
http://www.cro.ie/search/CompanyDetails.aspx?id=492405&type=C
Apple Operations Europe:
http://www.cro.ie/search/CompanyDetails.aspx?id=76927&type=C
Apple Operations International:
http://www.cro.ie/search/CompanyDetails.aspx?id=76941&type=C
Apple Retail Holding Europe:
http://www.cro.ie/search/CompanyDetails.aspx?id=379311&type=C
Apple Sales Ireland:
http://www.cro.ie/search/CompanyDetails.aspx?id=86705&type=C
Apple Sales International:
http://www.cro.ie/search/CompanyDetails.aspx?id=157192&type=C

Levin said that ASI received $70b over the last few years and $30b of that given to AOI, which is a holdings company used to invest profits so not liable for anything other than income tax on the interest, which they pay at the US rate. Avoiding non-US income taxes would be done either by ASI or the subs that give them money. They said unapologetically that their overseas income tax rates are extremely low and paid just $900m despite their profits being higher than in the US.

This is where some of the senators were happy (Johnson mostly) because it means the possibility of taking profits from foreign countries and bringing them back to the US without paying the foreign governments the taxes on them. Apple just doesn't want to give the US government such a big chunk - they want to give them less than 10%.


We are talking at cross purposes. LOL

For the record, I didn't mention 'sales tax'. I said tax on sales markup which is profit, i.e. income tax or that's what I meant to say at least. I am not trying to get into the nuanced discussion about tax in the US. I am specifically asking about the specific statement by Crowley that Apple sells products directly purchased in China through its Irish holding company, at zero mark up to all its European distribution centers thus eliminating income tax in all those countries on the sales of Apple products. I don't know how to be any more clear on what I am asking than this.
Edited by digitalclips - 5/22/13 at 11:07am
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post #69 of 89
Quote:
Originally Posted by Crowley View Post

One might also say that the authorities would be better served by the transparency to regulate effectively and ensure appropriate tax is paid.

 

One might. If one were wishing to be kind to the government. All this assuming we can define things like "regulate  effectively" and "appropriate tax". 1rolleyes.gif

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post #70 of 89
Quote:
Originally Posted by Crowley View Post

It's pretty comprehensively covered in the Senate Hearing Report: http://www.hsgac.senate.gov/subcommittees/investigations/hearings/offshore-profit-shifting-and-the-us-tax-code_-part-2


Business Insider have written it up in an easy to understand report: http://www.businessinsider.com/how-apple-reduces-what-it-pays-in-taxes-2013-5



Not much of this is new information by the way, it was covered extensively in the British press last November: 
http://www.bbc.co.uk/news/business-20197710
http://www.telegraph.co.uk/finance/newsbysector/mediatechnologyandtelecoms/9653961/Apple-pays-less-than-2pc-tax-on-overseas-profits.html
http://www.guardian.co.uk/technology/2012/nov/04/apple-paid-low-overseas-tax

It's not hard to find plenty more articles from left-wing and right wing sources

Funny how none of those support your claims.

You said that AOI buys phones at cost from China and sells them to the US at just below retail.

1. Where's your evidence for that claim?
2. If that were true, how did Apple generate $20 B in income and $6 B in income taxes in the US?
3. And even if it were true, I'm still waiting for any evidence that Apple has done anything illegal.
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post #71 of 89
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Originally Posted by digitalclips View Post


We are talking at cross purposes. LOL

For the record, I didn't mention 'sales tax'. I said tax on sales markup which is profit, i.e. income tax or that's what I meant to say at least. I am not trying to get into the nuanced discussion about tax in the US. I am specifically asking about the specific statement by Crowley that Apple sells products directly purchased in China through its Irish holding company, at zero mark up to all its European distribution centers thus eliminating income tax in all those countries on the sales of Apple products. I don't know how to be any more clear on what I am asking than this.

 

You are asking for a smoking gun that doesn't exist, it would be stupid of Apple to leave it laying around.

Apple have tied up all of their IP & accounting in all of the subsidiary companies that Marvin mentioned. There are also many others, Braeburn Capital (was in Reno), Baldwin Holdings (British Virgin Islands) & other 'Apple name' companies spring to mind in addition to iTunes S.à r.l (Luxembourg office that funnels all of iTunes purchases in Europe). 

 

Baldwin Holdings appear to hold the coffers for Apple Operations International, which is one of the low tax entities that you want figures for, but the paper trail will lead you in circles.

post #72 of 89
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Originally Posted by Droid View Post

You are asking for a smoking gun that doesn't exist, it would be stupid of Apple to leave it laying around.
Apple have tied up all of their IP & accounting in all of the subsidiary companies that Marvin mentioned. There are also many others, Braeburn Capital (was in Reno), Baldwin Holdings (British Virgin Islands) & other 'Apple name' companies spring to mind in addition to iTunes S.à r.l (Luxembourg office that funnels all of iTunes purchases in Europe). 

Baldwin Holdings appear to hold the coffers for Apple Operations International, which is one of the low tax entities that you want figures for, but the paper trail will lead you in circles.

Actually I'm not asking for the smoking gun at all. Nor am I discussing the IP issue Marvin mentioned.

Crowley is stating the smoking gun you refer to (assuming you are indeed talking about what I am) exists I for one have a hard time believing what he states as fact is indeed fact. Having said that I have no idea so await some proof.

Crowley states, as fact, in plain English and in an authoritative and confident manner that Apple Ireland passes on all product to European distribution channels at retail thus making all Apple European distribution on paper a non profit set up and retaining all European sales profits in Ireland. At no times does Crowley indicate he is being speculative or just guessing.

I'm asking him to prove his assertion. If as you say it is impossible to trace then where exactly is Crowley's source?
Edited by digitalclips - 5/22/13 at 12:35pm
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post #73 of 89
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Originally Posted by digitalclips View Post

I am specifically asking about the specific statement by Crowley that Apple sells products directly purchased in China through its Irish holding company, at zero mark up to all its European distribution centers thus eliminating income tax in all those countries on the sales of Apple products.

I see, I missed that statement. That explains how they have so little Corporation Tax. That is a pretty clever setup. One of the statements from the Harvard guy says:

"Apple avoids the reach of the foreign base company sales rules by contracting for manufacture of its products by third parties and in most cases, for U.S. tax purposes, selling to third parties. By using check-the-box disregarded entities, intercompany transactions within the group of companies that are classified as disregarded entities simply disappear."

The exhibit 1a memorandum has details of the whole setup on p17:

http://www.hsgac.senate.gov/download/?id=CDE3652B-DA4E-4EE1-B841-AEAD48177DC4
Quote:
Originally Posted by jragosta 
Funny how none of those support your claims.

You said that AOI buys phones at cost from China and sells them to the US at just below retail.

He said sold to non-US subsidiaries. They probably wouldn't be allowed to sell them to the US as Apple Inc is subject to US tax law and all the Irish companies are subs of Apple Inc. That would be risky and they might not be able to hide transactions between the US and Ireland that way. It also allows them to focus attention on the US tax as a positive, Tim even said quite explicitly that they wanted them to look at the 30.5% US Income Tax rate and ignore the extremely low foreign tax rates.
post #74 of 89
Quote:
Originally Posted by Marvin View Post

I see, I missed that statement. That explains how they have so little Corporation Tax. That is a pretty clever setup. One of the statements from the Harvard guy says:

Partial quote only ...

I also said I don't believe what he said (I repeat again, as some ppl keep missing / ducking my point ... specifically the 'sale at no mark up from Ireland to European distribution channel') so unlike you I don't see it as a pretty clever set up ... I'd like some proof before accepting what seems like guesswork at best to me.
Edited by digitalclips - 5/22/13 at 12:52pm
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post #75 of 89
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Originally Posted by jragosta View Post


Funny how none of those support your claims.

You said that AOI buys phones at cost from China and sells them to the US at just below retail.

1. Where's your evidence for that claim?
2. If that were true, how did Apple generate $20 B in income and $6 B in income taxes in the US?
3. And even if it were true, I'm still waiting for any evidence that Apple has done anything illegal.

 

I'm really getting tired of saying this to you.  This is not about the US.  I have not mentioned the US in any of these posts about Apple's dealings in Ireland.  The income that Apple earns in the US and the corporation (not income) taxe that they pay in the US are as far as I've seen, fine, I have no quibbles with them, though I haven't looked particularly closely because the US situation isn't of much interest to me.

 

And I've never said that Apple have done anything illegal.  I've said the exact opposite many times.  

 

Please stop trying to call me on things I haven't said.  I'm not going to repeat this again, as it's getting tiresome.

 

 

 

On a different note, I do need to make one correction, I said that it was AOI that handles the purchasing from China and reselling in Europe, but it's actually ASI.  A simple mistake.

 

And as I posted earlier, Business Insider summarise this arrangement here: http://www.businessinsider.com/how-apple-reduces-what-it-pays-in-taxes-2013-5 from information available taken from the Senate report and from Apple's own filings.

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post #76 of 89
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Originally Posted by Crowley View Post

I'm really getting tired of saying this to you.  This is not about the US.  I have not mentioned the US in any of these posts about Apple's dealings in Ireland.  The income that Apple earns in the US and the corporation (not income) taxe that they pay in the US are as far as I've seen, fine, I have no quibbles with them, though I haven't looked particularly closely because the US situation isn't of much interest to me.

And I've never said that Apple have done anything illegal.  I've said the exact opposite many times.  

Please stop trying to call me on things I haven't said.  I'm not going to repeat this again, as it's getting tiresome.



On a different note, I do need to make one correction, I said that it was AOI that handles the purchasing from China and reselling in Europe, but it's actually ASI.  A simple mistake.

And as I posted earlier, Business Insider summarise this arrangement here: http://www.businessinsider.com/how-apple-reduces-what-it-pays-in-taxes-2013-5 from information available taken from the Senate report and from Apple's own filings.

OK this time I agree with you. I too keep having folks here try to side track your points I try to refer to as being tied up with the US. I am 100% focussed on your statements regarding Apple's financial model in Europe. I would love to know if you are guessing or know for a fact Apple Ireland ships at retail (almost) to all the European distributors and retains all profits in Ireland. I know it isn't illegal but it would make what Tim said yesterday disingenuous to me at least. I really don't want to believe it is true hence wanting proof.

Update: Thank you for your source.

Regarding the article by Walter Hickey ... I already see a 'word of mouth exaggeration' at work here. Hickey wrote "and resells them at a major markup to other Apple affiliates in Europe", you re worded that to read that Apple moved product to distributors at almost retail. I quote "Apple Operations International then sells those iPhones to Apple UK, Apple Germany, Apple France etc for close to the retail price.". (You corrected yourself that you meant all products).

I am sorry but that is disingenuous too. There is plenty of room for a sizable (and perfectly normal) difference in those two versions of the truth. Your version is, to put it politely, 'spun'.
Edited by digitalclips - 5/22/13 at 1:29pm
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post #77 of 89
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Originally Posted by digitalclips View Post


Actually I'm not asking for the smoking gun at all. Nor am I discussing the IP issue Marvin mentioned.

Crowley is stating the smoking gun you refer to (assuming you are indeed talking about what I am) exists I for one have a hard time believing what he states as fact is indeed fact. Having said that I have no idea so await some proof.

Crowley states, as fact, in plain English and in an authoritative and confident manner that Apple Ireland passes on all product to European distribution channels at retail thus making all Apple European distribution on paper a non profit set up and retaining all European sales profits in Ireland. At no times does Crowley indicate he is being speculative or just guessing.

I'm asking him to prove his assertion. If as you say it is impossible to trace then where exactly is Crowley's source?

 

That's not strictly what I said.  Apple's operations in Europe do make some profit that they pay corporation tax on, I imagine it would be impossible to tune the machine so finely that they come out completely even, considering that they do have operational costs and retail premises and staff costs to cover.  Simply the Double Irish trick that Apple has pulled allows it to move the major part of the value of their sellable products into Apple Irish bank accounts, via subsidiaries.

 

There is no "smoking gun" here, it's not a detective novel, but its plain to see that this is what's happening - the revenue and taxes for ASI are pretty stark evidence of a dodge; $38b in profit since 2009, $21m in tax over the same period, an effective rate of 0.06%.  And they have no employees.

 

In Apple's own words:

 

"ASI is an operating company with employees who manage the procurement and supply chain for Apple products sold abroad by ADI. Accordingly, ASI files an Irish corporate tax return and pays taxes in Ireland."

 

But they have no actual employees registered in Ireland.

 

 

And for the avoidance of doubt, this is not illegal, and this is not a problem with Apple, this is a problem with the tax systems that allow it.

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post #78 of 89
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Originally Posted by Crowley View Post

I'm really getting tired of saying this to you.  This is not about the US.  I have not mentioned the US in any of these posts about Apple's dealings in Ireland.  The income that Apple earns in the US and the corporation (not income) taxe that they pay in the US are as far as I've seen, fine, I have no quibbles with them, though I haven't looked particularly closely because the US situation isn't of much interest to me.

And I've never said that Apple have done anything illegal.  I've said the exact opposite many times.  

Please stop trying to call me on things I haven't said.  I'm not going to repeat this again, as it's getting tiresome.



On a different note, I do need to make one correction, I said that it was AOI that handles the purchasing from China and reselling in Europe, but it's actually ASI.  A simple mistake.

And as I posted earlier, Business Insider summarise this arrangement here: http://www.businessinsider.com/how-apple-reduces-what-it-pays-in-taxes-2013-5 from information available taken from the Senate report and from Apple's own filings.

What you said is that AOI buys phones at low cost in China and then sells them to Apple US at close to retail pricing (or ASI - whichever fantasy you're having right now). That is blatantly wrong and is pretty strong evidence that you don't have any idea what you're talking about in this entire subject.

Furthermore, you continue to accuse Apple of wrongdoing yet have never provided one shred of evidence to back your position.
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post #79 of 89
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Originally Posted by jragosta View Post


What you said is that AOI buys phones at low cost in China and then sells them to Apple US at close to retail pricing (or ASI - whichever fantasy you're having right now). That is blatantly wrong and is pretty strong evidence that you don't have any idea what you're talking about in this entire subject.

 

I have never said that.  I never said that ASI (or AOI for that matter) sold anything to Apple US for sale in the US.  You've repeated that many times and its simply not true, I never said it.  I challenge you to find a single instance of me saying that.

 

Giving you the benefit of the doubt that the "US" was a slip, and replacing it with "UK" for arguments sake (which I have said).  Even so, why is it wrong?  It's a good business tactic.  I think Apple are very clever for doing it.  It's what ASI was set up to do if you read Apple's own description of the company.  How and why am I "blatantly" wrong?  

 

Quote:
Originally Posted by jragosta View Post

Furthermore, you continue to accuse Apple of wrongdoing yet have never provided one shred of evidence to back your position.
 

That's a lie.  Over the course of these discussions about Apple's tax I don't think I have once accused Apple of doing anything wrong.  You keep saying that I've done so, but have yet to provide a shred of evidence that I've done so.

 

 

 

EDIT: I realise I said I wouldn't repeat this again just a few posts ago.  I guess that makes me a liar in one respect.  I definitely won't repeat it again, I'll just point back to this post.


Edited by Crowley - 5/22/13 at 1:50pm

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post #80 of 89
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Originally Posted by Crowley View Post

That's not strictly what I said.  Apple's operations in Europe do make some profit that they pay corporation tax on, I imagine it would be impossible to tune the machine so finely that they come out completely even, considering that they do have operational costs and retail premises and staff costs to cover.  Simply the Double Irish trick that Apple has pulled allows it to move the major part of the value of their sellable products into Apple Irish bank accounts, via subsidiaries.

There is no "smoking gun" here, it's not a detective novel, but its plain to see that this is what's happening - the revenue and taxes for ASI are pretty stark evidence of a dodge; $38b in profit since 2009, $21m in tax over the same period, an effective rate of 0.06%.  And they have no employees.

In Apple's own words:

"ASI is an operating company with employees who manage the procurement and supply chain for Apple products sold abroad by ADI. Accordingly, ASI files an Irish corporate tax return and pays taxes in Ireland."


But they have no actual employees registered in Ireland.



And for the avoidance of doubt, this is not illegal, and this is not a problem with Apple, this is a problem with the tax systems that allow it.

I think baring your exaggeration noted in my last post, we agree. As an Apple retailer my company was given a 33% discount off of retail to resell, a nice healthy margin on which substantial taxes were paid. That was buying directly from Apple. Let us assume Apple Centers owned by Apple work on similar basis (and I agree perhaps lower as they don't need as much with Apple supporting them in so many ways). That would still leave Apple Ireland with a large percentage of retail value on products as retained income (not profit obviously). Nothing underhand nothing abnormal nothing that wasn't happening in 1979 though the mid 1990's that I can attest to. I believe the margins went lower after that but the basic premiss that Apple has always retained a large portion of profits at central locations is unchanged I am sure. It is simply good business. If Ireland offered tax incentives (as they did) to attract business good for them and good for Apple. As a large share holder I applaud this ... and I assure you my politics are independent / centrist.
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