I'd like to read the opinions of [@]ireland[/@] and the other posters from Ireland on this matter.
Absolutely. I see this as a loss for Ireland if it goes through. And considering another global financial collapse is apparently looming, so much the worse for their people.
There is another clever strategy that Apple uses that the new report documents — holding a large chunk of its intellectual property in low-tax Irish affiliates as well. Think of it this way: If you live in, say, Germany and buy an IPhone, you are buying a physical object that was assembled in China from parts that come from all over. But you are also buying a piece of the intellectual property of Apple — a benefit from the labor of thousands of designers and programmers and marketers who are in California.
But Apple has no desire to pay high California and U.S. income tax on all its intellectual property. So instead, Apple Inc. shares that cost with its Irish affiliates in proportion to their sales. As the report puts it: “By structuring its intellectual property rights and distribution operations in the manner it did, Apple Inc. was able to avoid having worldwide Apple sales revenue related to its intellectual property attributed to itself in the United States where it would be subject to taxation in the year received. Instead, Apple Inc. arranged for a large portion of its worldwide sales revenue to be attributed to [Apple Service International] in Ireland. As explained earlier, according to Apple, Ireland has provided Apple affiliates with an income tax rate of less than 2% and as low as 0.05%."
The Senate would have us believe that Apple was involved in profit-shifting from the U.S. to Ireland. The report intimates although does not directly state that Apple just assigned IP rights to Ireland.
The full truth is more complicated.
>Apple Inc. shares that cost with its Irish affiliates in proportion to their sales
The cost of "...the labor of thousands of designers and programmers ... who are in California" [I'm not sure about the marketers] is indeed shared between Apple in the Americas and Apple International in Ireland. And, more importantly, that has been the case for over thirty years. This is not a recent change! The development costs for products have been shared in proportion to sales - since the early 80's.
Apple International has paid for a proportionate share of the development cost and those IP rights are therefore owned by Apple International. They are NOT owned by Apple Americas. Therefore the profits derived from that share of IP rights are NOT owned by Apple Americas, but by Apple International. The situation would be very different if all the development had been funded from within the U.S. but that has not been the case - my earlier comment about auto-manufacturing and the transfer-pricing of design docs references that point. But it does not apply here. Apple structured its shared-development-cost setup many years ago and held to it even when the company was in very poor shape.
For the Senate to suggest, as it has done, that Apple is avoiding its obligations by profit-shifting between the U.S. and Ireland is deceiving and obfuscative. It is true that revenue and profit in the Americas is recognized by Apple Americas, and that international revenue and profit is recognized by Apple International. That is not only legal, but perfectly proper and reasonable as AI owns the IP rights for those international sales.
Here’s how it works according to testimony and documents submitted by Apple and other sources during Senate hearings, and as reported by the Washington Post::
"Apple Operations International is registered in Cork, Ireland, but has “no physical presence at that or any other address,” according to the report. Indeed, the corporate entity has existed for 30 years and apparently never had a single employee. Of the three people on its board, all Apple employees, two live in California; 32 of its last 33 board meetings took place in Cupertino, and the Irish director participated in seven of them. Its assets are managed by a Nevada company, and held in bank accounts in New York.
It falls in a strange loophole: Because it is not managed and controlled in Ireland, that nation does not tax its earnings, even at the low Irish corporate income tax rate. And because it is not registered in the United States, it has owed no American taxes. It would be a little like an individual living in America and earning a living from investments in Ireland and thus being able to avoid paying taxes to either government—a strategy that decidedly would not work, by the way.
From 2009 to 2012, the Irish affiliate received $29.9 billion in dividend income. The upshot, according to the report: "According to Apple, AOI’s net income made up 30% of Apple’s total worldwide net profits from 2009-2011, yet Apple also disclosed to the Subcommittee that AOI did not pay any corporate income tax to any national government during that period."
There is another clever strategy that Apple uses that the new report documents — holding a large chunk of its intellectual property in low-tax Irish affiliates as well. Think of it this way: If you live in, say, Germany and buy an IPhone, you are buying a physical object that was assembled in China from parts that come from all over. But you are also buying a piece of the intellectual property of Apple — a benefit from the labor of thousands of designers and programmers and marketers who are in California.
But Apple has no desire to pay high California and U.S. income tax on all its intellectual property. So instead, Apple Inc. shares that cost with its Irish affiliates in proportion to their sales. As the report puts it: “By structuring its intellectual property rights and distribution operations in the manner it did, Apple Inc. was able to avoid having worldwide Apple sales revenue related to its intellectual property attributed to itself in the United States where it would be subject to taxation in the year received. Instead, Apple Inc. arranged for a large portion of its worldwide sales revenue to be attributed to [Apple Service International] in Ireland. As explained earlier, according to Apple, Ireland has provided Apple affiliates with an income tax rate of less than 2% and as low as 0.05%."
So to put things in better perspective take at look at 2012 specifically. Apple Sales International had revenue of over $63.9 billion that year. How much did they pay in taxes? They claimed taxable income of around €50 million for that year, and paid less than €10 million to the Irish in taxes.
To be fair Google along with dozens of other companies use similar tax avoidance strategies. I think Apple is being profiled simply because they are the largest and wealthiest of the group.
That's Apple not paying tax in Ireland. It doesn't owe anything but taxes on profits in the retail sales in its own stores in Germany.
That IRA or 401K which should anyway have been entirely after the total economic crash that the USA escaped by pushing it towards the EU through disputable financial methods? Let's not go this way, please. We all know that Europe's citizens have taken an average debt of 5 years of working life due to America's inability to manage their finances (like France's citizens having to increase their retirement age after the US crisis).
The EU's people pay and will keep paying for America.
Why do we? Because it's better to keep a global peace based on commerce than keep whining and going to war in the end. The last thing any of us wants is an Adolf Hitler to ride on an economic crisis (remember Weimar) and get us into another World War.
Stop blaming the EU for your own issues. Your politicians mismanaged your country, ours mismanage our countries. Your financial institutions abuse your system and ours, so do ours. In the end, the small investors and the workers pay for the rich. What else did you expect?
Granted, US stole from people in Europe. So now it's ok for EU to steal from people in the US? BTW - It's the institutions on either side doing this. You and I would have more respect for each other. I'd not be cheering on for any large institutions (typically government+finance) from any side taking wealth created by regular people as implied by gimarbazat. That was my intent. I'm sorry you read that as whining.
I will continue to blame EU, the US or any unproductive organizations/institutions taking wealth from the labor of people who actually produces anything useful when they are doing it blatantly for whatever reason. It happened the EU is the topic here and I guess that offended you. Here's what I won't do: Tell you what to do.
Granted, US stole from people in Europe. So now it's ok for EU to steal from people in the US? BTW - It's the institutions on either side doing this. You and I would have more respect for each other. I'd not be cheering on for any large institutions (typically government+finance) from any side taking wealth created by regular people as implied by gimarbazat. That was my intent. I'm sorry you read that as whining.
I will continue to blame EU, the US or any unproductive organizations/institutions taking wealth from the labor of people who actually produces anything useful when they are doing it blatantly for whatever reason. It happened the EU is the topic here and I guess that offended you. Here's what I won't do: Tell you what to do.
What did the US "steal" from Europeans? AFAIK, foolish investing by individuals and companies "stole" money from their own pockets.
Granted, US stole from people in Europe. So now it's ok for EU to steal from people in the US? BTW - It's the institutions on either side doing this. You and I would have more respect for each other. I'd not be cheering on for any large institutions (typically government+finance) from any side taking wealth created by regular people as implied by gimarbazat. That was my intent. I'm sorry you read that as whining.
I will continue to blame EU, the US or any unproductive organizations/institutions taking wealth from the labor of people who actually produces anything useful when they are doing it blatantly for whatever reason. It happened the EU is the topic here and I guess that offended you. Here's what I won't do: Tell you what to do.
I was not actually seeing that as blaming, just trying to point out that in the end, really rich and powerful people played games, and we all pay for it. As in the 20s, as in the 80s.
As for the "tell you what to do", I'd be damned if I really have a clue. I'm not an economist, just a regular middle-level manager.
What did the US "steal" from Europeans? AFAIK, foolish investing by individuals and companies "stole" money from their own pockets.
It is, to my opinion, much more complex than that, and it mainly is caused by the consanguinity between big (finance or not) business and political elites. The role played at diverse points in time at major american financial institutions by leading italian, british, french or spanish politicians should for example raise citizens eyebrows on both sides of the pond.
Edit: This one has much more information. For instance: "Apple's retail units in France, Germany and Britain purchase goods from the Irish units. The prices are set at levels that ensure these units in bigger states do not report much profit. This means the company avoids tax on sales in its bigger markets.
In 2011, the last year for which accounts are available, Apple Retail UK Ltd reported profits of £31 million (€36.3 million) on sales of £860 million and paid tax of £9 million (€10.5 million).
In the same year, Apple Retail France reported a loss of €21 million on sales of €346 million and paid income tax of €7 million.
Apple Retail Germany reported a €4 million loss on sales of €174 million and paid no income tax."
...and to repeat something I mentioned earlier Apple is not alone in this. Google, UBS, Amazon, and many, many others have similar tax avoidance set-ups. Apple is getting the attention because of their market leadership and the massive profit numbers they're able to put up, in part thru their tax avoidance efforts and related investment operations.
A remarkably economically illiterate piece from the WSJ. It's possible Apple Germany retail made a loss. However that piece seems to suggest that if an iPhone is sold in Germany all revenues should be booked to apples retail division there. That's never the case in for any good which is exported.
It would only be transfer pricing if the cost to Apple retail were higher than the cost to its competitors.
A remarkably economically illiterate piece from the WSJ. It's possible Apple Germany retail made a loss. However that piece seems to suggest that if an iPhone is sold in Germany all revenues should be booked to apples retail division there. That's never the case in for any good which is exported.
It would only be transfer pricing if the cost to Apple retail were higher than the cost to its competitors.
It's retail competitors. As in the competitors to Apples retail division.
Look. If the price to Apple retail in Germany of an iPhone is €450 and it's sold for €500 apple retail owes taxes on the profits garnered from the local revenue if any.
It can be transfer pricing but only if the €450 is higher than the wholesale price charged to other retail stores selling the iPhone. That would be charging to Ireland revenue which would otherwise be taxed in Germany.
If however Apple charges apple retail and other retailers the same wholesale prices there is no transfer pricing. That's merely the way the world works.
Let's forget that nonsense. Corporation taxes are due where the corporation is based. What's in dispute is exactly where that is and how Apple is exploiting a loophole in two countries to not pay tax in either.
Was the price of an iPhone sold by Apple International to Apple Germany (for sale in the Apple Store) the same as sales to Deutsche Telekom? Or maybe DT buys its phones from Apple Germany rather than Apple International ?
If not, then why is there a difference? Warranty liability, perhaps? Maybe there are others.
And is the price of iPhones sold to various retailers in Europe the same?
It's always fun to see people advocate for no corporate taxes. Yet they expect that when an employee dials 911, the police or fire department will still show up. They expect the utilities to work. They expect the roads their employees use to get to work to be paved and plowed. And of course they expect their company to be able to lobby politicians and contribute to campaigns. They want companies to have all the rights of a citizen but not pay the taxes that any citizen would be required to in order to obtain all that society provides to a citizen.
What. The. Absolute. ****??
Perhaps you can explain how federal income tax, which this clearly refers to, affects local utilities?
Was the price of an iPhone sold by Apple International to Apple Germany (for sale in the Apple Store) the same as sales to Deutsche Telekom? Or maybe DT buys its phones from Apple Germany rather than Apple International ?
If not, then why is there a difference? Warranty liability, perhaps? Maybe there are others.
And is the price of iPhones sold to various retailers in Europe the same?
Good questions. Anyone here know the answers (or where to find them) rather than guessing?
Comments
Good for them! Everyone should pay as little taxes as legally possible. Once the money gets in the hands of politicians it's misspent.
Absolutely. I see this as a loss for Ireland if it goes through. And considering another global financial collapse is apparently looming, so much the worse for their people.
There is another clever strategy that Apple uses that the new report documents — holding a large chunk of its intellectual property in low-tax Irish affiliates as well. Think of it this way: If you live in, say, Germany and buy an IPhone, you are buying a physical object that was assembled in China from parts that come from all over. But you are also buying a piece of the intellectual property of Apple — a benefit from the labor of thousands of designers and programmers and marketers who are in California.
But Apple has no desire to pay high California and U.S. income tax on all its intellectual property. So instead, Apple Inc. shares that cost with its Irish affiliates in proportion to their sales. As the report puts it: “By structuring its intellectual property rights and distribution operations in the manner it did, Apple Inc. was able to avoid having worldwide Apple sales revenue related to its intellectual property attributed to itself in the United States where it would be subject to taxation in the year received. Instead, Apple Inc. arranged for a large portion of its worldwide sales revenue to be attributed to [Apple Service International] in Ireland. As explained earlier, according to Apple, Ireland has provided Apple affiliates with an income tax rate of less than 2% and as low as 0.05%."
The Senate would have us believe that Apple was involved in profit-shifting from the U.S. to Ireland. The report intimates although does not directly state that Apple just assigned IP rights to Ireland.
The full truth is more complicated.
>Apple Inc. shares that cost with its Irish affiliates in proportion to their sales
The cost of "...the labor of thousands of designers and programmers ... who are in California" [I'm not sure about the marketers] is indeed shared between Apple in the Americas and Apple International in Ireland. And, more importantly, that has been the case for over thirty years. This is not a recent change! The development costs for products have been shared in proportion to sales - since the early 80's.
Apple International has paid for a proportionate share of the development cost and those IP rights are therefore owned by Apple International. They are NOT owned by Apple Americas. Therefore the profits derived from that share of IP rights are NOT owned by Apple Americas, but by Apple International. The situation would be very different if all the development had been funded from within the U.S. but that has not been the case - my earlier comment about auto-manufacturing and the transfer-pricing of design docs references that point. But it does not apply here. Apple structured its shared-development-cost setup many years ago and held to it even when the company was in very poor shape.
For the Senate to suggest, as it has done, that Apple is avoiding its obligations by profit-shifting between the U.S. and Ireland is deceiving and obfuscative. It is true that revenue and profit in the Americas is recognized by Apple Americas, and that international revenue and profit is recognized by Apple International. That is not only legal, but perfectly proper and reasonable as AI owns the IP rights for those international sales.
That's Apple not paying tax in Ireland. It doesn't owe anything but taxes on profits in the retail sales in its own stores in Germany.
Their German operations claimed to have a loss, thus avoiding German taxes.
Got a link for that?
Their German operations claimed to have a loss, thus avoiding German taxes.
Just like Amazon... Loses money every quarter since they started, yet Wall Street loves 'em.
That IRA or 401K which should anyway have been entirely after the total economic crash that the USA escaped by pushing it towards the EU through disputable financial methods? Let's not go this way, please. We all know that Europe's citizens have taken an average debt of 5 years of working life due to America's inability to manage their finances (like France's citizens having to increase their retirement age after the US crisis).
The EU's people pay and will keep paying for America.
Why do we? Because it's better to keep a global peace based on commerce than keep whining and going to war in the end. The last thing any of us wants is an Adolf Hitler to ride on an economic crisis (remember Weimar) and get us into another World War.
Stop blaming the EU for your own issues. Your politicians mismanaged your country, ours mismanage our countries. Your financial institutions abuse your system and ours, so do ours. In the end, the small investors and the workers pay for the rich. What else did you expect?
Granted, US stole from people in Europe. So now it's ok for EU to steal from people in the US? BTW - It's the institutions on either side doing this. You and I would have more respect for each other. I'd not be cheering on for any large institutions (typically government+finance) from any side taking wealth created by regular people as implied by gimarbazat. That was my intent. I'm sorry you read that as whining.
I will continue to blame EU, the US or any unproductive organizations/institutions taking wealth from the labor of people who actually produces anything useful when they are doing it blatantly for whatever reason. It happened the EU is the topic here and I guess that offended you. Here's what I won't do: Tell you what to do.
Granted, US stole from people in Europe. So now it's ok for EU to steal from people in the US? BTW - It's the institutions on either side doing this. You and I would have more respect for each other. I'd not be cheering on for any large institutions (typically government+finance) from any side taking wealth created by regular people as implied by gimarbazat. That was my intent. I'm sorry you read that as whining.
I will continue to blame EU, the US or any unproductive organizations/institutions taking wealth from the labor of people who actually produces anything useful when they are doing it blatantly for whatever reason. It happened the EU is the topic here and I guess that offended you. Here's what I won't do: Tell you what to do.
What did the US "steal" from Europeans? AFAIK, foolish investing by individuals and companies "stole" money from their own pockets.
Granted, US stole from people in Europe. So now it's ok for EU to steal from people in the US? BTW - It's the institutions on either side doing this. You and I would have more respect for each other. I'd not be cheering on for any large institutions (typically government+finance) from any side taking wealth created by regular people as implied by gimarbazat. That was my intent. I'm sorry you read that as whining.
I will continue to blame EU, the US or any unproductive organizations/institutions taking wealth from the labor of people who actually produces anything useful when they are doing it blatantly for whatever reason. It happened the EU is the topic here and I guess that offended you. Here's what I won't do: Tell you what to do.
I was not actually seeing that as blaming, just trying to point out that in the end, really rich and powerful people played games, and we all pay for it. As in the 20s, as in the 80s.
As for the "tell you what to do", I'd be damned if I really have a clue. I'm not an economist, just a regular middle-level manager.
What did the US "steal" from Europeans? AFAIK, foolish investing by individuals and companies "stole" money from their own pockets.
It is, to my opinion, much more complex than that, and it mainly is caused by the consanguinity between big (finance or not) business and political elites. The role played at diverse points in time at major american financial institutions by leading italian, british, french or spanish politicians should for example raise citizens eyebrows on both sides of the pond.
Not at all finding fault with that either. If you'll read back you'll see what prompted my original comment.
Of course. Here's one tho there's another link that offers more details. Just couldn't find it right off.
http://blogs.wsj.com/digits/2014/09/30/how-apples-tax-structure-works/
Edit: This one has much more information. For instance:
"Apple's retail units in France, Germany and Britain purchase goods from the Irish units. The prices are set at levels that ensure these units in bigger states do not report much profit. This means the company avoids tax on sales in its bigger markets.
In 2011, the last year for which accounts are available, Apple Retail UK Ltd reported profits of £31 million (€36.3 million) on sales of £860 million and paid tax of £9 million (€10.5 million).
In the same year, Apple Retail France reported a loss of €21 million on sales of €346 million and paid income tax of €7 million.
Apple Retail Germany reported a €4 million loss on sales of €174 million and paid no income tax."
http://www.euractiv.com/euro-finance/irish-loophole-apples-low-tax-bi-news-519888
...and to repeat something I mentioned earlier Apple is not alone in this. Google, UBS, Amazon, and many, many others have similar tax avoidance set-ups. Apple is getting the attention because of their market leadership and the massive profit numbers they're able to put up, in part thru their tax avoidance efforts and related investment operations.
A remarkably economically illiterate piece from the WSJ. It's possible Apple Germany retail made a loss. However that piece seems to suggest that if an iPhone is sold in Germany all revenues should be booked to apples retail division there. That's never the case in for any good which is exported.
It would only be transfer pricing if the cost to Apple retail were higher than the cost to its competitors.
What competitors?
It's retail competitors. As in the competitors to Apples retail division.
Look. If the price to Apple retail in Germany of an iPhone is €450 and it's sold for €500 apple retail owes taxes on the profits garnered from the local revenue if any.
It can be transfer pricing but only if the €450 is higher than the wholesale price charged to other retail stores selling the iPhone. That would be charging to Ireland revenue which would otherwise be taxed in Germany.
If however Apple charges apple retail and other retailers the same wholesale prices there is no transfer pricing. That's merely the way the world works.
Let's forget that nonsense. Corporation taxes are due where the corporation is based. What's in dispute is exactly where that is and how Apple is exploiting a loophole in two countries to not pay tax in either.
What competitors?
Was the price of an iPhone sold by Apple International to Apple Germany (for sale in the Apple Store) the same as sales to Deutsche Telekom? Or maybe DT buys its phones from Apple Germany rather than Apple International ?
If not, then why is there a difference? Warranty liability, perhaps? Maybe there are others.
And is the price of iPhones sold to various retailers in Europe the same?
It's always fun to see people advocate for no corporate taxes. Yet they expect that when an employee dials 911, the police or fire department will still show up. They expect the utilities to work. They expect the roads their employees use to get to work to be paved and plowed. And of course they expect their company to be able to lobby politicians and contribute to campaigns. They want companies to have all the rights of a citizen but not pay the taxes that any citizen would be required to in order to obtain all that society provides to a citizen.
What. The. Absolute. ****??
Perhaps you can explain how federal income tax, which this clearly refers to, affects local utilities?
Is that what they do, identical costs whether it's an Apple store or a reseller? I don't really know.
Good questions. Anyone here know the answers (or where to find them) rather than guessing?