Apple, Amazon, Google accused of avoiding taxes in the UK

Posted:
in General Discussion edited January 2014


Apple is the latest technology company accused of avoiding U.K. taxes, as the company is said to have paid £10 million in corporation tax last year on estimated sales of £6 billion.



Apple was targeted in a new report by the Daily Mail, which noted that the company has a major operation based out of Ireland to take advantage of its low tax rate. The tax rate in Cork is just 12.5 percent, or about half the 24 percent corporate rate in the U.K.



Apple is also said to have an offshoot based out of the Caribbean, where tax rates are favorable in the British Virgin Islands.



The attention on Apple's taxes comes as rival Amazon is under investigation from the U.K.'s HM Revenue & Customs after it was discovered that the online retailer did not pay any British corporation tax in 2010 or 2011. Amazon was able to avoid taxes after switching its European headquarters to Luxembourg.



Google has also been called out for basing its operations out of Ireland for tax purposes, while also bringing money to the U.K. through the Netherlands and Bermuda.



Apple Retail U.K. Ltd was found to have paid taxes of £3.79 million on sales of over £500 million in the fiscal year that concluded in 2010, according to the report. Apple's other primary subsidiary, Apple (U.K.) Ltd., paid another £6.1 million in taxes on sales of nearly £69 million.



Apple's total revenues from the U.K. are not officially known, but it's estimated that the country accounts for 10 percent of the £63 billion the company earned in 2010. That would mean Apple paid about £10 million in taxes on sales of around £6 billion.



Taxes have also been an issue for Apple in the U.S., where the company has called for a repatriation holiday that would allow it to move some of its cash hoard back to the U.S. at a favorable tax rate. Apple has asked the company for an incentive to move its cash, two-thirds of which is housed overseas, back into America, but the requests have gained little traction within the government.



[ View article on AppleInsider ]

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Comments

  • Reply 1 of 61
    gatorguygatorguy Posts: 20,280member
    How did Google figure into this article?
  • Reply 2 of 61
    crees!crees! Posts: 501member
    Everyone wants a piece of someone else's pie. Be a maker not a taker.
  • Reply 3 of 61
    jragostajragosta Posts: 10,473member
    Total non-issue.



    Taxes in most countries are so complex that it's easy to have a dispute with a taxing authority even with the best of intentions. Furthermore, there's plenty of evidence that taxing authorities go after things that they don't really think they'll win in the hopes that they'll collect some of the time.



    In the end, either Apple owes money or they don't. If they owe, they'll pay and fix their procedures. Unless someone has evidence that Apple intentionally goes out of their way to cheat taxing authorities, it's a non-story.



    Worthless click-bait article.
  • Reply 4 of 61
    blitz1blitz1 Posts: 412member
    Quote:
    Originally Posted by crees! View Post


    Everyone wants a piece of someone else's pie. Be a maker not a taker.



    Like making a decent salary iso taking cheap labour?
  • Reply 5 of 61




    Seriously, they report this like it is something unusual. Naturally they chose international companies with the highest public profiles to report on, consistent with their desire to pull hits. Then of course you can read about how Kim Kardashian should be a Bond girl with her "hour-glass" figure and full make-up for swimming in the ocean.



  • Reply 6 of 61
    mrstepmrstep Posts: 446member
    For a minute, I thought "how can they be including the gross sales numbers when talking about taxes - taxes are on profits!", but then remembered it's Europe. And then people wonder (and complain) that the same products cost more over there... \



    (Ignoring that taxes aren't on profits if you have the right connections and tax shelters, but you know what I mean...)
  • Reply 7 of 61
    gatorguygatorguy Posts: 20,280member
    FWIW, the article also states that Apple was audited for it's US 2007-2009 returns and is apparently negotiating additional tax liabilities. No mention of amounts.



    "The company’s accounts for 2007 to 2009 are being examined by the Internal Revenue Service – the U.S. equivalent of HM Revenue & Customs.



    An audit of its federal income tax returns resulted in ‘certain adjustments’ being proposed, some of which it is appealing against."



    Nothing unusual about that.
  • Reply 8 of 61
    blitz1blitz1 Posts: 412member
    Quote:
    Originally Posted by mrstep View Post


    For a minute, I thought "how can they be including the gross sales numbers when talking about taxes - taxes are on profits!", but then remembered it's Europe. And then people wonder (and complain) that the same products cost more over there... \



    (Ignoring that taxes aren't on profits if you have the right connections and tax shelters, but you know what I mean...)



    But taxes are on profits in Europe.

    Please, be educated before throwing anything in the wild.
  • Reply 9 of 61
    rot'napplerot'napple Posts: 1,839member
    Quote:
    Originally Posted by Blitz1 View Post


    Like making a decent salary iso taking cheap labour?



    Who determines the decent salary vs chep labour? The employer or employee?

    /

    /

    /
  • Reply 10 of 61
    blitz1blitz1 Posts: 412member
    Quote:
    Originally Posted by Rot'nApple View Post


    Who determines the decent salary vs chep labour? The employer or employee?

    /

    /

    /



    Considering your line of reasoning, you sure must feel that a job as kapo in the concentration camps was an improvement above being sent to slave labour. However, I doubt it that neither the kapo, nor the poor guy sent to exhaust himself on the job must have felt that his position was actually satisfying.
  • Reply 11 of 61
    Companies listed here often points out Taxes as higher product costs here in UK compare to what our American friends fork out. Apple, Google products comes mostly at US price + Avg. UK premium, but my beef is with Amazon and it's Kindle. $79 = £89? HOW!!?



    EDIT:

    Quick Google revealed why!? http://www.techradar.com/news/portab...-at-89-1030106
  • Reply 12 of 61
    jragostajragosta Posts: 10,473member
    Quote:
    Originally Posted by Blitz1 View Post


    But taxes are on profits in Europe.

    Please, be educated before throwing anything in the wild.



    Depends. If they're accused of mis-reporting the value added tax, it is based on sales.
  • Reply 13 of 61
    It's worth mentioning that this article comes from the Daily Mail, a tabloid newspaper who's very reason for being is to provoke outrage, no matter what the facts of a case really are.



    As a UK resident, it doesn't bother me one iota if Apple has arranged its affairs, entirely legally it would appear, so that they minimise their tax liability. No sane human would have it any other way, surely? Who would want to pay more tax than they absolutely had to? It's not like governments are particularly good at spending money wisely...



    This is just another case of whipping up public indignation for the purposes of selling newspapers.
  • Reply 14 of 61
    umumumumumum Posts: 76member
    large companies avoid tax - how is this news?



    more disturbing is the way that when caught in blatantly criminal avoidance they negotiate special deals with the man from the hmrc (uk tax authority) to pay far less than the amount they avoided, with hmrc breaking its own guidelines and then hiding the fact that they did it



    i.e. vodafone, infamous for running billions of pounds of business through a couple of rented rooms offshore and a part time swiss accountant, perhaps the most profitable man on the planet



    ""By March 2011 the total earned in this way had hit $10.2bn and will by now be around $12.5bn, or £7.5bn. All earned by a company showing, in its latest accounts, a total wage bill of $8,000!""



    if only i could do the same with my salary
  • Reply 15 of 61
    Quote:
    Originally Posted by mrstep View Post


    For a minute, I thought "how can they be including the gross sales numbers when talking about taxes - taxes are on profits!", but then remembered it's Europe.



    Corporate taxes are on profits in Europe too. Sales numbers are irrelevant.



    It is obvious that due to VAT (sales tax) receipts, consumers paid a lot of tax on sales of Apple products. The UK made good money from $6b sales. But this news is about tax on profits.



    Europe, just like the US has a bunch of tax rules which means companies pay accountants lots of money to creatively find loopholes to reduce their corporate tax burden. Sounds like good business to me!



    The UK is suffering here because companies like Apple are choosing to base their business outside of the UK due to lower corporate tax rates elsewhere. Not much they can do unless the loopholes are not there and the accountants have got too creative.
  • Reply 16 of 61
    charlitunacharlituna Posts: 7,205member
    Quote:
    Originally Posted by fecklesstechguy View Post






    Seriously, they report this like it is something unusual. Naturally they chose international companies with the highest public profiles to report on, consistent with their desire to pull hits. Then of course you can read about how Kim Kardashian should be a Bond girl with her "hour-glass" figure and full make-up for swimming in the ocean.







    Quote:
    Originally Posted by Gatorguy View Post


    FWIW, the article also states that Apple was audited for it's US 2007-2009 returns and is apparently negotiating additional tax liabilities. No mention of amounts.



    "The company?s accounts for 2007 to 2009 are being examined by the Internal Revenue Service ? the U.S. equivalent of HM Revenue & Customs.



    An audit of its federal income tax returns resulted in ?certain adjustments? being proposed, some of which it is appealing against."



    Nothing unusual about that.



    These. This is all standard form with every company, especially the big ones. Standard tactics, from both sides.



    Hell, pretty much every major bank in the US has its base of operations in one of like 4 states, Delaware being the most common, due to tax reasons. It might be tacky but its not illegal.
  • Reply 17 of 61
    blitz1blitz1 Posts: 412member
    Quote:
    Originally Posted by jragosta View Post


    Depends. If they're accused of mis-reporting the value added tax, it is based on sales.



    We're talking about income tax, not VAT, which, by the way, is always based on gross sales

    (it's a tad more complicated than that, but I don't want to blow some fuses in you as you already seem to struggle).
  • Reply 18 of 61
    MarvinMarvin Posts: 14,209moderator
    Quote:
    Originally Posted by jragosta View Post


    Total non-issue.



    Taxes in most countries are so complex that it's easy to have a dispute with a taxing authority even with the best of intentions.



    Worthless click-bait article.



    Yeah because everyone does it, it's ok:



    http://www.guardian.co.uk/politics/r...?newsfeed=true

    http://www.bbc.co.uk/news/uk-politics-17661011



    Tax rates are setup to afford things that taxpayers money is used for like quality healthcare, education etc. When corporations avoid paying their fair share, they diminish the quality of those services. There's no reason why corporations should be allowed to avoid it when individuals can't.



    Apple makes about 25% profit on their earnings so £1.5b profit in 2010 on which they supposedly paid £10m tax.



    It seems they paid 24.3% in the US instead of 35% so this report may be out.



    The claim is that they used Irish and Virgin Islands subsidiaries to pay 12.5% tax instead of the UK 24% so they presumably ought to have paid at least:



    £1.5b profit x 0.125 = £188m.



    "Documents from one of its two main UK divisions, Apple Retail UK Ltd, show it paid tax of just £3.79million on sales of more than £500million in the year to September 2010, the latest accounts available.



    Another subsidiary, Apple (UK) Ltd, paid £6.1million in tax on sales of just under £69 million."



    http://www.dailymail.co.uk/news/arti...d-10m-tax.html



    ^ this highlights where the miscalculation is coming from. They are estimating that the UK makes 10% of the worldwide sales so £6b total and then adding up recorded taxes of £10m and lumping them together.



    The reality is £9.89m tax on £569m sales (~£142m profit) = 7% tax.



    Still far off the 24% UK tax rate, which should be applied for UK sales so something is up but that's what investigations are for.



    The other UK sales that make up the 10% of the worldwide total must be recorded some other way but it seems odd that only £569m would be recorded in the UK. How can you record over 90% of your sales outside a country you sell in?
  • Reply 19 of 61
    jumperjumper Posts: 34member
    Quote:
    Originally Posted by Marvin View Post


    Yeah because everyone does it, it's ok:



    http://www.guardian.co.uk/politics/r...?newsfeed=true

    http://www.bbc.co.uk/news/uk-politics-17661011



    Tax rates are setup to afford things that taxpayers money is used for like quality healthcare, education etc. When corporations avoid paying their fair share, they diminish the quality of those services. There's no reason why corporations should be allowed to avoid it when individuals can't.



    Apple makes about 25% profit on their earnings so £1.5b profit in 2010 on which they supposedly paid £10m tax.



    It seems they paid 24.3% in the US instead of 35% so this report may be out.



    The claim is that they used Irish and Virgin Islands subsidiaries to pay 12.5% tax instead of the UK 24% so they presumably ought to have paid at least:



    £1.5b profit x 0.125 = £188m.



    "Documents from one of its two main UK divisions, Apple Retail UK Ltd, show it paid tax of just £3.79million on sales of more than £500million in the year to September 2010, the latest accounts available.



    Another subsidiary, Apple (UK) Ltd, paid £6.1million in tax on sales of just under £69 million."



    http://www.dailymail.co.uk/news/arti...d-10m-tax.html



    ^ this highlights where the miscalculation is coming from. They are estimating that the UK makes 10% of the worldwide sales so £6b total and then adding up recorded taxes of £10m and lumping them together.



    The reality is £9.89m tax on £569m sales (~£142m profit) = 7% tax.



    Still far off the 24% UK tax rate, which should be applied for UK sales so something is up but that's what investigations are for.



    The other UK sales that make up the 10% of the worldwide total must be recorded some other way but it seems odd that only £569m would be recorded in the UK. How can you record over 90% of your sales outside a country you sell in?



    Wow... more made-up stuff. I never understand why people just write junk that has no real bearing on the article. Apple is a BIG business, I'm sure they consult very good tax people in the UK on how to manage the tax bit. Nothing wrong with that. All big companies do that. If the amount is unfair then they should change the laws in the UK.



    THIS IS A NON STORY
  • Reply 20 of 61
    This is no news. I would say almost every big companies and rich people too mind (just ask Lord Ashcroft et al), do this in the UK. Part of the blame lies on the political and geographical factors but mostly, sovereignty and economic. That's why there is tax incentive in some part of the regions/countries for example. These companies are obviously just taking the offer with the offering parties needing their presence to get an edge over other things like employment etc.



    They do this deliberately but it all mostly legal.
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