They pay sales tax. It's corporation tax that they avoid through transfers to Ireland.
They don't pay sales tax (except on what they consume instead of resell like paper products, misc supplies, etc). The buyer of Apple's product pays sales tax. Apple only acts as the collection agent.
In literal terms, yes, in effect, debateable. In the hypothetical absence of the sales tax Apple might be able to charge more, and in that case the presence of the tax means Apple earns less profit, ergo the same effect.
But I digress, perhaps a simple rewording is in order to make the original point clearer...
The sale of Apple's products contributes to government revenues in the form of sales tax. There is no suspicion that Apple are in any way avoiding or hindering the collection of sales tax.
In literal terms, yes, in effect, debateable. In the hypothetical absence of the sales tax Apple might be able to charge more, and in that case the presence of the tax means Apple earns less profit, ergo the same effect.
But I digress, perhaps a simple rewording is in order to make the original point clearer...
The sale of Apple's products contributes to government revenues in the form of sales tax. There is no suspicion that Apple are in any way avoiding or hindering the collection of sales tax.
Once again apple doesn't owe corporation tax in Australia because they are not based there.
Apple Australia are based in Australia.
Quote:
Originally Posted by asdasd
That's not avoidance or transfers it's the way it works.
Except that the liability has been transferred to a subsidiary in Ireland, which doesn't pay any tax because of a disconnect. Are Apple based in Ireland? Or have they avoided that tax liability?
Except that the liability has been transferred to a subsidiary in Ireland, which doesn't pay any tax because of a disconnect. Are Apple based in Ireland? Or have they avoided that tax liability?
Apple Australia merely operates the stores. It's not the headquarters. Apple Australia buys iPads at wholesale price from Ireland ( or the US) and the sells it on and whatever profits it makes from those stores it pays taxes on. It's in the same position as any retailer.
Prior to apple owning its own stores this wouldn't have been an issue. Then Apple sold to external retailers at wholesale price and booked at the wholesalers HQ. which is probably what BMW do. Apple didn't need subsidiaries in all countries.
Of course even acknowledging that the piece is ridiculous, it's taking the margin per iPad, which is revenue not profit on the retail price and ignoring the vast majority of iPad sales which are sold to channel at wholesale. it then assumes this fictional marginal profit is owed where items are sold, not where they come from.
Of course it is. Because all retailers operate at close to zero margin, right? Because all retailers buy 99% of their product from another company with the same owners, right? Because Apple Ireland make all of the iPads, right? Because all wholesalers exploit loopholes in Irish corporate law, right?
Apple transfer the bulk of their non-US profits to Apple Ireland (the actual companies are Apple Sales International and Apple Distribution International, I believe), where they pay barely any tax on them. The argument that Apple don't owe any other country any tax because they aren't based in that country is technically correct, but a conceptual dud, because Apple clearly aren't based in Ireland. They're exploiting loopholes in the international tax system that arise because there is no commitment to either unitary taxation, or country-by-country reporting and accountability, or both.
Of course it is. Because all retailers operate at close to zero margin, right? Because all retailers buy 99% of their product from another company with the same owners, right? Because Apple Ireland make all of the iPads, right? Because all wholesalers exploit loopholes in Irish corporate law, right?
Apple transfer the bulk of their non-US profits to Apple Ireland (the actual companies are Apple Sales International and Apple Distribution International, I believe), where they pay barely any tax on them. The argument that Apple don't owe any other country any tax because they aren't based in that country is technically correct, but a conceptual dud, because Apple clearly aren't based in Ireland. They're exploiting loopholes in the international tax system that arise because there is no commitment to either unitary taxation, or country-by-country reporting and accountability, or both.
They are exploiting Irish and American law but they don't owe corporation tax in Australia or the UK.
I have no idea what your first paragraph even means. So I'll start with a simple question.
When a BMW car is sold in Australia but imported from Dusseldorf where is corporation tax paid?
BTW Apple clearly are based in Ireland and have been since 1980. They employ a few thousand. As to what they do I'll explain more when you answer the BMW question.
When a BMW car is sold in Australia but imported from Dusseldorf where is corporation tax paid?
Depends on the corporate arrangement of course. Assuming that BMW Germany is the main company and manufacturer, incorporated in Germany, and BMW Australia is a subsidiary selling the cars, and incorporated in Australia, then corporation tax is paid in both, on their respective profits.
And that's fine.
What's not fine is BMW Ireland wading in, buying the cars at cost from BMW Germany, then selling them at near retail price to BMW Australia, thereby transferring all of the value added (and hence, profit) to Ireland.
Quote:
Originally Posted by asdasd
BTW Apple clearly are based in Ireland and have been since 1980. They employ a few thousand. As to what they do I'll explain more when you answer the BMW question.
Apple are not based in Ireland. They are based in the USA. They have some subsidiaries in Ireland, but that is not the same thing.
Depends on the corporate arrangement of course. Assuming that BMW Germany is the main company and manufacturer, incorporated in Germany, and BMW Australia is a subsidiary selling the cars, and incorporated in Australia, then corporation tax is paid in both, on their respective profits.
And that's fine.
What's not fine is BMW Ireland wading in, buying the cars at cost from BMW Germany, then selling them at near retail price to BMW Australia, thereby transferring all of the value added (and hence, profit) to Ireland.
Apple are not based in Ireland. They are based in the USA. They have some subsidiaries in Ireland, but that is not the same thing.
You didn't really answer the question. The answer is corporation tax is paid where BMW is based, or headquartered. Note that BMW can outsource production but own the IP.
In Apples case there are two companies with the IP. Apple in the US and Apple in Cork. One is where manufacturing for the Americas used to happen ( but is now out sourced ) the other is where worldwide manufacturing used to happen ( but is now outsourced). Neither company is buying built iPads from other Apple companies, they get them from FoxConn. But Foxconn merely assembles the iPads and most of the components and the OS are Apple's property. The difference between the cost of the iPad to Apple and it's wholesale price from Apple - the value added - is down to the IP. And a reasonable discussion can be had about how IP is transfered, and whether tax should be where IP is actually produced, but none of this would mean that Australia is owed corporation tax for iPad sales.
Yet Apple Sales International, headquartered in Ireland, claims they don't have tax residency there and owes no tax to them. In fact they claim don't need to pay tax on their profits to anyone. They have been "stateless" for tax purposes since 2009, five years now. Still OK with it?
And yes, they're not the only big company avoiding tax obligations. Google, Facebook, and lots of non-techs have their own schemes, tho I haven't heard of any others that claim not to answer to anyone's taxing authorities.
Depends on the corporate arrangement of course. Assuming that BMW Germany is the main company and manufacturer, incorporated in Germany, and BMW Australia is a subsidiary selling the cars, and incorporated in Australia, then corporation tax is paid in both, on their respective profits.
I clearly did answer the question, thanks.
Quote:
Originally Posted by asdasd
Neither company is buying built iPads from other Apple companies, they get them from FoxConn. But Foxconn merely assembles the iPads and most of the components and the OS are Apple's property.
So your BMW example was a bit rubbish then?
Quote:
Originally Posted by asdasd
The answer is corporation tax is paid where BMW is based, or headquartered.
In Apple's case that is the USA. The Irish companies are subsidiaries.
Yet Apple Sales International, headquartered in Ireland, claims they don't have tax residency there and owes no tax to them. In fact they claim don't need to pay tax on their profits to anyone. They are "stateless" for tax purposes. Still OK with it?
Seriously. I said I wasn't ok with it. Apple should pay that tax in Ireland or repatriate it to the US. Those are the only two countries with claims. All I am doing here is explaining corporation tax 101.
In Apple's case that is the USA. The Irish companies are subsidiaries.
I really can't make this simpler. But I'll try.
1) BMW manufactures in Dusseldorf and sells to Australia. Corporation tax paid in Germany.
2) BMW Germany outsources to a different company in China to build, ships to Dusseldorf and resells to Australia. Corporation tax paid in Germany.
3) BMW sets up a subsidiary to manufacture in Indonesia. Indonesia builds and sells to Australia . Corporation tax paid in Indonesia and , if repatriated, in Germany ( minus any tax paid in Indonesia).
4) BMW sets up a subsidiary to manufacture in Indonesia. Indonesia outsources the build to a non BMW company (which is merely an expense) and sells finished product to Australia . Corporation tax paid in Indonesia and, if repatriated, in Germany ( minus any tax paid in Indonesia).
Note that to set up a subsidiary which can manufacture or outsource your production for you you need to transfer the IP.
Note that in all four cases Australia is not owed corporation tax.
This isn't transfer pricing. In no case here is the importing country owed corporation tax.
Corporation tax 101.
Apple should pay its taxes in Ireland or repatriate to the us. But that's all.
Seriously. I said I wasn't ok with it. Apple should pay that tax in Ireland or repatriate it to the US. Those are the only two countries with claims. All I am doing here is explaining corporation tax 101.
Ah, good then. I thought you were arguing that you didn't believe Apple to be doing anything wrong in your view. I've misunderstood your position. You think they're wrong not to be paying tax to the Irish on their $40B+ in realized profits.
Comments
They don't pay sales tax (except on what they consume instead of resell like paper products, misc supplies, etc). The buyer of Apple's product pays sales tax. Apple only acts as the collection agent.
Yes, ok, that's what I meant.
Well that's no tax cost to Apple is it?
In literal terms, yes, in effect, debateable. In the hypothetical absence of the sales tax Apple might be able to charge more, and in that case the presence of the tax means Apple earns less profit, ergo the same effect.
But I digress, perhaps a simple rewording is in order to make the original point clearer...
The sale of Apple's products contributes to government revenues in the form of sales tax. There is no suspicion that Apple are in any way avoiding or hindering the collection of sales tax.
True. That was never Apple's money to begin with.
Of course, that's why Apple doing so would be illegal. But no one is saying that's what they're doing, the kerfuffle is entirely about tax on profits.
Sorry for the distraction.
Once again apple doesn't owe corporation tax in Australia because they are not based there.
That's not avoidance or transfers it's the way it works.
Do they owe it in Ireland?
Once again apple doesn't owe corporation tax in Australia because they are not based there.
Apple Australia are based in Australia.
That's not avoidance or transfers it's the way it works.
Except that the liability has been transferred to a subsidiary in Ireland, which doesn't pay any tax because of a disconnect. Are Apple based in Ireland? Or have they avoided that tax liability?
Yes. I've said that before.
Apple Australia merely operates the stores. It's not the headquarters. Apple Australia buys iPads at wholesale price from Ireland ( or the US) and the sells it on and whatever profits it makes from those stores it pays taxes on. It's in the same position as any retailer.
Prior to apple owning its own stores this wouldn't have been an issue. Then Apple sold to external retailers at wholesale price and booked at the wholesalers HQ. which is probably what BMW do. Apple didn't need subsidiaries in all countries.
Of course even acknowledging that the piece is ridiculous, it's taking the margin per iPad, which is revenue not profit on the retail price and ignoring the vast majority of iPad sales which are sold to channel at wholesale. it then assumes this fictional marginal profit is owed where items are sold, not where they come from.
Of course it is. Because all retailers operate at close to zero margin, right? Because all retailers buy 99% of their product from another company with the same owners, right? Because Apple Ireland make all of the iPads, right? Because all wholesalers exploit loopholes in Irish corporate law, right?
Apple transfer the bulk of their non-US profits to Apple Ireland (the actual companies are Apple Sales International and Apple Distribution International, I believe), where they pay barely any tax on them. The argument that Apple don't owe any other country any tax because they aren't based in that country is technically correct, but a conceptual dud, because Apple clearly aren't based in Ireland. They're exploiting loopholes in the international tax system that arise because there is no commitment to either unitary taxation, or country-by-country reporting and accountability, or both.
They are exploiting Irish and American law but they don't owe corporation tax in Australia or the UK.
I have no idea what your first paragraph even means. So I'll start with a simple question.
When a BMW car is sold in Australia but imported from Dusseldorf where is corporation tax paid?
BTW Apple clearly are based in Ireland and have been since 1980. They employ a few thousand. As to what they do I'll explain more when you answer the BMW question.
When a BMW car is sold in Australia but imported from Dusseldorf where is corporation tax paid?
Depends on the corporate arrangement of course. Assuming that BMW Germany is the main company and manufacturer, incorporated in Germany, and BMW Australia is a subsidiary selling the cars, and incorporated in Australia, then corporation tax is paid in both, on their respective profits.
And that's fine.
What's not fine is BMW Ireland wading in, buying the cars at cost from BMW Germany, then selling them at near retail price to BMW Australia, thereby transferring all of the value added (and hence, profit) to Ireland.
BTW Apple clearly are based in Ireland and have been since 1980. They employ a few thousand. As to what they do I'll explain more when you answer the BMW question.
Apple are not based in Ireland. They are based in the USA. They have some subsidiaries in Ireland, but that is not the same thing.
You didn't really answer the question. The answer is corporation tax is paid where BMW is based, or headquartered. Note that BMW can outsource production but own the IP.
In Apples case there are two companies with the IP. Apple in the US and Apple in Cork. One is where manufacturing for the Americas used to happen ( but is now out sourced ) the other is where worldwide manufacturing used to happen ( but is now outsourced). Neither company is buying built iPads from other Apple companies, they get them from FoxConn. But Foxconn merely assembles the iPads and most of the components and the OS are Apple's property. The difference between the cost of the iPad to Apple and it's wholesale price from Apple - the value added - is down to the IP. And a reasonable discussion can be had about how IP is transfered, and whether tax should be where IP is actually produced, but none of this would mean that Australia is owed corporation tax for iPad sales.
Yet Apple Sales International, headquartered in Ireland, claims they don't have tax residency there and owes no tax to them. In fact they claim don't need to pay tax on their profits to anyone. They have been "stateless" for tax purposes since 2009, five years now. Still OK with it?
And yes, they're not the only big company avoiding tax obligations. Google, Facebook, and lots of non-techs have their own schemes, tho I haven't heard of any others that claim not to answer to anyone's taxing authorities.
EDIT: Pertinent article from the IrishTimes here:
http://www.irishtimes.com/business/economy/apple-paid-36m-tax-on-7-11bn-profits-at-irish-unit-1.1715727
Depends on the corporate arrangement of course. Assuming that BMW Germany is the main company and manufacturer, incorporated in Germany, and BMW Australia is a subsidiary selling the cars, and incorporated in Australia, then corporation tax is paid in both, on their respective profits.
I clearly did answer the question, thanks.
Neither company is buying built iPads from other Apple companies, they get them from FoxConn. But Foxconn merely assembles the iPads and most of the components and the OS are Apple's property.
So your BMW example was a bit rubbish then?
The answer is corporation tax is paid where BMW is based, or headquartered.
In Apple's case that is the USA. The Irish companies are subsidiaries.
Seriously. I said I wasn't ok with it. Apple should pay that tax in Ireland or repatriate it to the US. Those are the only two countries with claims. All I am doing here is explaining corporation tax 101.
I really can't make this simpler. But I'll try.
1) BMW manufactures in Dusseldorf and sells to Australia. Corporation tax paid in Germany.
2) BMW Germany outsources to a different company in China to build, ships to Dusseldorf and resells to Australia. Corporation tax paid in Germany.
3) BMW sets up a subsidiary to manufacture in Indonesia. Indonesia builds and sells to Australia . Corporation tax paid in Indonesia and , if repatriated, in Germany ( minus any tax paid in Indonesia).
4) BMW sets up a subsidiary to manufacture in Indonesia. Indonesia outsources the build to a non BMW company (which is merely an expense) and sells finished product to Australia . Corporation tax paid in Indonesia and, if repatriated, in Germany ( minus any tax paid in Indonesia).
Note that to set up a subsidiary which can manufacture or outsource your production for you you need to transfer the IP.
Note that in all four cases Australia is not owed corporation tax.
This isn't transfer pricing. In no case here is the importing country owed corporation tax.
Corporation tax 101.
Apple should pay its taxes in Ireland or repatriate to the us. But that's all.
Ah, good then. I thought you were arguing that you didn't believe Apple to be doing anything wrong in your view. I've misunderstood your position. You think they're wrong not to be paying tax to the Irish on their $40B+ in realized profits.