Do you actually believe this? There have been countless news stories about how Apple manipulated their operations to shift most EU profits into Ireland to minimise their tax liability. They've been fined for it before.
You cannot shift a profit. Don’t even try. Detecting profit is the most basic thing in a tax investigation. To shift a profit you have to commit rough crimes such as shill invoicing, money laundering and alike. Companies at Apple’s scale are continuously monitored during their operations by the tax authorities, SEC etc...
Of course there may be differing political opinions or stances regarding international trade and fiscal issues, but things change when they are ported to legal and investigative platforms, because those platforms work on technical grounds, not on journalists’ opinions. And apparently Irish investigation by EU led to nowhere and France tries a different course of action...
What Apple has been doing is buying iProducts from China through its Irish company. It then sells those products at a higher price to yet other Apple owned subsidiaries who then sell those same products to its Apple owned distributors across Europe like Apple Germany, Apple Italy, Apple France and so on, again at some even higher price which assures there's little profit realized when the products sell to citizens in a particular country. Those Apple-owned subsidiaries are left with just enough margin in the deal to cover their costs. Because their margins and their costs are designed to be roughly equal there's not much if any taxes to pay in the countries where the sale occurred because there's not much left in the way of profits in them. All the profits were realized far up the chain and they are substantial.
So at the end of the day those profits end up sitting in Apple Ireland, or as reported now in Apple Jersey (see Paradise Papers https://www.bbc.com/news/world-us-canada-41889787) and as such they are not taxable in the country where the transaction took place. But yeah, technically Apple is obligated to pay its taxes in the country where the profit was realized, and Apple might claim to pay all the taxes they are legally obligated to pay. It's just not the country where the retail sale happened.
Its total wrong to say that Apple Ireland is buying iProducts from China. This is a total misunderstanding of IP. The Chinese assembly factories don't own that device and don't sell it to Apple
It's a license agreement to assemble components that apple owns already. FoxConn does not own anything in the iPhone it is assembling. It doesn't own the chassis, or the software, or the CPU, or the GPU, or the GPS, or the camera, or anything else. It can't sell the assembled product. All it does is assemble bits that Apple sends it, that Apple owns by buying or building. Apple stays in ownership of all the components it allows Foxconn access to to assemble the iPhone, and the final product. This cost of assembly to Apple is about $5 per device or so, IIRC. There is no selling of an iPhone you don't own. FoxConn does not own that iPhone, or any part of it, it merely invoices Apple for the cost of assembly.
(The value added is much higher than the cost of this assembly by the way, as what adds the value to the completed iPhone is the software and the brand. Another blow to the labour theory of value).
And the assembly is one of the last steps of production, not the first.
Any yes the accounting trickery being used is generally legal. There's folks at the multinationals paid a whole lotta money for crafting some way to dodge assorted tax laws, counter to the spirit of those laws (!)
There is no accounting trickery in wholesale vs retail prices. I am sure that I have explained this before but its pretty remedial. If BMW sells cars to France via a BMW distributor fully owned by BMW, then the French treasury can only tax the retail profits of that BMW store. It has always been thus. The only trickery would be if the BMW dealership was charged a higher wholesale price than other dealers to transfer profits back to Germany ( if corporate tax were lower in Germany).
Given all that I haven't much hope in the rest of your articles, although I haven't fully linked into them.
You don't seem to be dealing, at all here, with digital services. Care to?
If a French citizen orders Apple Music on his iPhone paid for in Francs and and streamed to his iDevice purchased from Apple France in the Paris France Apple store then where did the sales takes place, and where is the revenue recognized? There's a mismatch.
BTW you quite obviously did not read the article I linked for you explaining why Foxconn would be billing Apple for a completed iDevice which they factually are, and not just the cost of assembly. It all plays into tax avoidance, definition of imports and exports, and where profits are realized along the chain of transactions. I've always considered you a much better reader and more than a bit surprised you'd be sticking to your own interpretation steadfastly instead of what was factually found during a Senate investigation. Reading the offered links hasn't made you question your understanding of it all, at least a tiny bit? Hard to believe it hasn't.
Do you actually believe this? There have been countless news stories about how Apple manipulated their operations to shift most EU profits into Ireland to minimise their tax liability. They've been fined for it before.
You cannot shift a profit. Don’t even try. Detecting profit is the most basic thing in a tax investigation. To shift a profit you have to commit rough crimes such as shill invoicing, money laundering and alike. Companies at Apple’s scale are continuously monitored during their operations by the tax authorities, SEC etc...
Of course there may be differing political opinions or stances regarding international trade and fiscal issues, but things change when they are ported to legal and investigative platforms, because those platforms work on technical grounds, not on journalists’ opinions. And apparently Irish investigation by EU led to nowhere and France tries a different course of action...
What Apple has been doing is buying iProducts from China through its Irish company. It then sells those products at a higher price to yet other Apple owned subsidiaries who then sell those same products to its Apple owned distributors across Europe like Apple Germany, Apple Italy, Apple France and so on, again at some even higher price which assures there's little profit realized when the products sell to citizens in a particular country. Those Apple-owned subsidiaries are left with just enough margin in the deal to cover their costs. Because their margins and their costs are designed to be roughly equal there's not much if any taxes to pay in the countries where the sale occurred because there's not much left in the way of profits in them. All the profits were realized far up the chain and they are substantial.
So at the end of the day those profits end up sitting in Apple Ireland, or as reported now in Apple Jersey (see Paradise Papers https://www.bbc.com/news/world-us-canada-41889787) and as such they are not taxable in the country where the transaction took place. But yeah, technically Apple is obligated to pay its taxes in the country where the profit was realized, and Apple might claim to pay all the taxes they are legally obligated to pay. It's just not the country where the retail sale happened.
Its total wrong to say that Apple Ireland is buying iProducts from China. This is a total misunderstanding of IP. The Chinese assembly factories don't own that device and don't sell it to Apple
It's a license agreement to assemble components that apple owns already. FoxConn does not own anything in the iPhone it is assembling. It doesn't own the chassis, or the software, or the CPU, or the GPU, or the GPS, or the camera, or anything else. It can't sell the assembled product. All it does is assemble bits that Apple sends it, that Apple owns by buying or building. Apple stays in ownership of all the components it allows Foxconn access to to assemble the iPhone, and the final product. This cost of assembly to Apple is about $5 per device or so, IIRC. There is no selling of an iPhone you don't own. FoxConn does not own that iPhone, or any part of it, it merely invoices Apple for the cost of assembly.
(The value added is much higher than the cost of this assembly by the way, as what adds the value to the completed iPhone is the software and the brand. Another blow to the labour theory of value).
And the assembly is one of the last steps of production, not the first.
Any yes the accounting trickery being used is generally legal. There's folks at the multinationals paid a whole lotta money for crafting some way to dodge assorted tax laws, counter to the spirit of those laws (!)
There is no accounting trickery in wholesale vs retail prices. I am sure that I have explained this before but its pretty remedial. If BMW sells cars to France via a BMW distributor fully owned by BMW, then the French treasury can only tax the retail profits of that BMW store. It has always been thus. The only trickery would be if the BMW dealership was charged a higher wholesale price than other dealers to transfer profits back to Germany ( if corporate tax were lower in Germany).
Given all that I haven't much hope in the rest of your articles, although I haven't fully linked into them.
You don't seem to be dealing, at all here, with digital services. Care to?
If a French citizen orders Apple Music on his iPhone paid for in Francs and purchased from Apple France in the Paris Apple store then where did the sale takes place, and where is the revenue recognized? There's a mismatch.
Do you actually believe this? There have been countless news stories about how Apple manipulated their operations to shift most EU profits into Ireland to minimise their tax liability. They've been fined for it before.
You cannot shift a profit. Don’t even try. Detecting profit is the most basic thing in a tax investigation. To shift a profit you have to commit rough crimes such as shill invoicing, money laundering and alike. Companies at Apple’s scale are continuously monitored during their operations by the tax authorities, SEC etc...
Of course there may be differing political opinions or stances regarding international trade and fiscal issues, but things change when they are ported to legal and investigative platforms, because those platforms work on technical grounds, not on journalists’ opinions. And apparently Irish investigation by EU led to nowhere and France tries a different course of action...
What Apple has been doing is buying iProducts from China through its Irish company. It then sells those products at a higher price to yet other Apple owned subsidiaries who then sell those same products to its Apple owned distributors across Europe like Apple Germany, Apple Italy, Apple France and so on, again at some even higher price which assures there's little profit realized when the products sell to citizens in a particular country. Those Apple-owned subsidiaries are left with just enough margin in the deal to cover their costs. Because their margins and their costs are designed to be roughly equal there's not much if any taxes to pay in the countries where the sale occurred because there's not much left in the way of profits in them. All the profits were realized far up the chain and they are substantial.
So at the end of the day those profits end up sitting in Apple Ireland, or as reported now in Apple Jersey (see Paradise Papers https://www.bbc.com/news/world-us-canada-41889787) and as such they are not taxable in the country where the transaction took place. But yeah, technically Apple is obligated to pay its taxes in the country where the profit was realized, and Apple might claim to pay all the taxes they are legally obligated to pay. It's just not the country where the retail sale happened.
Its total wrong to say that Apple Ireland is buying iProducts from China. This is a total misunderstanding of IP. The Chinese assembly factories don't own that device and don't sell it to Apple
It's a license agreement to assemble components that apple owns already. FoxConn does not own anything in the iPhone it is assembling. It doesn't own the chassis, or the software, or the CPU, or the GPU, or the GPS, or the camera, or anything else. It can't sell the assembled product. All it does is assemble bits that Apple sends it, that Apple owns by buying or building. Apple stays in ownership of all the components it allows Foxconn access to to assemble the iPhone, and the final product. This cost of assembly to Apple is about $5 per device or so, IIRC. There is no selling of an iPhone you don't own. FoxConn does not own that iPhone, or any part of it, it merely invoices Apple for the cost of assembly.
(The value added is much higher than the cost of this assembly by the way, as what adds the value to the completed iPhone is the software and the brand. Another blow to the labour theory of value).
And the assembly is one of the last steps of production, not the first.
Any yes the accounting trickery being used is generally legal. There's folks at the multinationals paid a whole lotta money for crafting some way to dodge assorted tax laws, counter to the spirit of those laws (!)
There is no accounting trickery in wholesale vs retail prices. I am sure that I have explained this before but its pretty remedial. If BMW sells cars to France via a BMW distributor fully owned by BMW, then the French treasury can only tax the retail profits of that BMW store. It has always been thus. The only trickery would be if the BMW dealership was charged a higher wholesale price than other dealers to transfer profits back to Germany ( if corporate tax were lower in Germany).
Given all that I haven't much hope in the rest of your articles, although I haven't fully linked into them.
You don't seem to be dealing, at all here, with digital services. Care to?
If a French citizen orders Apple Music on his iPhone paid for in Francs and purchased from Apple France in the Paris Apple store then where did the sale takes place, and where is the revenue recognized? There's a mismatch.
Do you actually believe this? There have been countless news stories about how Apple manipulated their operations to shift most EU profits into Ireland to minimise their tax liability. They've been fined for it before.
You cannot shift a profit. Don’t even try. Detecting profit is the most basic thing in a tax investigation. To shift a profit you have to commit rough crimes such as shill invoicing, money laundering and alike. Companies at Apple’s scale are continuously monitored during their operations by the tax authorities, SEC etc...
Of course there may be differing political opinions or stances regarding international trade and fiscal issues, but things change when they are ported to legal and investigative platforms, because those platforms work on technical grounds, not on journalists’ opinions. And apparently Irish investigation by EU led to nowhere and France tries a different course of action...
What Apple has been doing is buying iProducts from China through its Irish company. It then sells those products at a higher price to yet other Apple owned subsidiaries who then sell those same products to its Apple owned distributors across Europe like Apple Germany, Apple Italy, Apple France and so on, again at some even higher price which assures there's little profit realized when the products sell to citizens in a particular country. Those Apple-owned subsidiaries are left with just enough margin in the deal to cover their costs. Because their margins and their costs are designed to be roughly equal there's not much if any taxes to pay in the countries where the sale occurred because there's not much left in the way of profits in them. All the profits were realized far up the chain and they are substantial.
So at the end of the day those profits end up sitting in Apple Ireland, or as reported now in Apple Jersey (see Paradise Papers https://www.bbc.com/news/world-us-canada-41889787) and as such they are not taxable in the country where the transaction took place. But yeah, technically Apple is obligated to pay its taxes in the country where the profit was realized, and Apple might claim to pay all the taxes they are legally obligated to pay. It's just not the country where the retail sale happened.
Its total wrong to say that Apple Ireland is buying iProducts from China. This is a total misunderstanding of IP. The Chinese assembly factories don't own that device and don't sell it to Apple
It's a license agreement to assemble components that apple owns already. FoxConn does not own anything in the iPhone it is assembling. It doesn't own the chassis, or the software, or the CPU, or the GPU, or the GPS, or the camera, or anything else. It can't sell the assembled product. All it does is assemble bits that Apple sends it, that Apple owns by buying or building. Apple stays in ownership of all the components it allows Foxconn access to to assemble the iPhone, and the final product. This cost of assembly to Apple is about $5 per device or so, IIRC. There is no selling of an iPhone you don't own. FoxConn does not own that iPhone, or any part of it, it merely invoices Apple for the cost of assembly.
(The value added is much higher than the cost of this assembly by the way, as what adds the value to the completed iPhone is the software and the brand. Another blow to the labour theory of value).
And the assembly is one of the last steps of production, not the first.
Any yes the accounting trickery being used is generally legal. There's folks at the multinationals paid a whole lotta money for crafting some way to dodge assorted tax laws, counter to the spirit of those laws (!)
There is no accounting trickery in wholesale vs retail prices. I am sure that I have explained this before but its pretty remedial. If BMW sells cars to France via a BMW distributor fully owned by BMW, then the French treasury can only tax the retail profits of that BMW store. It has always been thus. The only trickery would be if the BMW dealership was charged a higher wholesale price than other dealers to transfer profits back to Germany ( if corporate tax were lower in Germany).
Given all that I haven't much hope in the rest of your articles, although I haven't fully linked into them.
You don't seem to be dealing, at all here, with digital services. Care to?
If a French citizen orders Apple Music on his iPhone paid for in Francs and purchased from Apple France in the Paris Apple store then where did the sale takes place, and where is the revenue recognized? There's a mismatch.
Luxembourg, obviously.
Why France?
if a developer sells an app in the App Store then he recognises revenue and profits (VAT aside which is taken at source and never gets to him) where he lives and is a tax resident. The only other option is tax returns to every single country in the world he has sold an app to. That would be a boost for accountants no doubt, but not the developer. Same rules apply.
And it’s not like the consumer country is starved of tax. They can and do apply a sales tax (VAT in this case).
Do you actually believe this? There have been countless news stories about how Apple manipulated their operations to shift most EU profits into Ireland to minimise their tax liability. They've been fined for it before.
You cannot shift a profit. Don’t even try. Detecting profit is the most basic thing in a tax investigation. To shift a profit you have to commit rough crimes such as shill invoicing, money laundering and alike. Companies at Apple’s scale are continuously monitored during their operations by the tax authorities, SEC etc...
Of course there may be differing political opinions or stances regarding international trade and fiscal issues, but things change when they are ported to legal and investigative platforms, because those platforms work on technical grounds, not on journalists’ opinions. And apparently Irish investigation by EU led to nowhere and France tries a different course of action...
What Apple has been doing is buying iProducts from China through its Irish company. It then sells those products at a higher price to yet other Apple owned subsidiaries who then sell those same products to its Apple owned distributors across Europe like Apple Germany, Apple Italy, Apple France and so on, again at some even higher price which assures there's little profit realized when the products sell to citizens in a particular country. Those Apple-owned subsidiaries are left with just enough margin in the deal to cover their costs. Because their margins and their costs are designed to be roughly equal there's not much if any taxes to pay in the countries where the sale occurred because there's not much left in the way of profits in them. All the profits were realized far up the chain and they are substantial.
So at the end of the day those profits end up sitting in Apple Ireland, or as reported now in Apple Jersey (see Paradise Papers https://www.bbc.com/news/world-us-canada-41889787) and as such they are not taxable in the country where the transaction took place. But yeah, technically Apple is obligated to pay its taxes in the country where the profit was realized, and Apple might claim to pay all the taxes they are legally obligated to pay. It's just not the country where the retail sale happened.
Its total wrong to say that Apple Ireland is buying iProducts from China. This is a total misunderstanding of IP. The Chinese assembly factories don't own that device and don't sell it to Apple
It's a license agreement to assemble components that apple owns already. FoxConn does not own anything in the iPhone it is assembling. It doesn't own the chassis, or the software, or the CPU, or the GPU, or the GPS, or the camera, or anything else. It can't sell the assembled product. All it does is assemble bits that Apple sends it, that Apple owns by buying or building. Apple stays in ownership of all the components it allows Foxconn access to to assemble the iPhone, and the final product. This cost of assembly to Apple is about $5 per device or so, IIRC. There is no selling of an iPhone you don't own. FoxConn does not own that iPhone, or any part of it, it merely invoices Apple for the cost of assembly.
(The value added is much higher than the cost of this assembly by the way, as what adds the value to the completed iPhone is the software and the brand. Another blow to the labour theory of value).
And the assembly is one of the last steps of production, not the first.
Any yes the accounting trickery being used is generally legal. There's folks at the multinationals paid a whole lotta money for crafting some way to dodge assorted tax laws, counter to the spirit of those laws (!)
There is no accounting trickery in wholesale vs retail prices. I am sure that I have explained this before but its pretty remedial. If BMW sells cars to France via a BMW distributor fully owned by BMW, then the French treasury can only tax the retail profits of that BMW store. It has always been thus. The only trickery would be if the BMW dealership was charged a higher wholesale price than other dealers to transfer profits back to Germany ( if corporate tax were lower in Germany).
Given all that I haven't much hope in the rest of your articles, although I haven't fully linked into them.
You don't seem to be dealing, at all here, with digital services. Care to?
If a French citizen orders Apple Music on his iPhone paid for in Francs and purchased from Apple France in the Paris Apple store then where did the sale takes place, and where is the revenue recognized? There's a mismatch.
Luxembourg, obviously.
Why France?
if a developer sells an app in the App Store then he recognises revenue and profits (VAT aside which is taken at source and never gets to him) where he lives and is a tax resident. The only other option is tax returns to every single country in the world he has sold an app to. That would be a boost for accountants no doubt, but not the developer. Same rules apply.
I file taxes for my corporate activities in several jurisdictions. Some are paid on a city level, some on a county, others to a specific state and higher up the chain to the Federal Government. It often depends where the activity took place.
Some cities in the US as a more specific example require reporting and paying corporate taxes on the economic activity a company realizes from that city's citizens. Counties too might require a corporation to file a tax return and pay appropriate corporate taxes on the economic activity that takes place in that county. I think most States have their own requirement for the reporting and filing of corporate tax returns and then of course there's the federal Government.
Filing separate returns in various jurisdictions is not exactly onerous or unheard of. I'm a business owner (multiple actually) and intimately familiar with it.
Do you actually believe this? There have been countless news stories about how Apple manipulated their operations to shift most EU profits into Ireland to minimise their tax liability. They've been fined for it before.
You cannot shift a profit. Don’t even try. Detecting profit is the most basic thing in a tax investigation. To shift a profit you have to commit rough crimes such as shill invoicing, money laundering and alike. Companies at Apple’s scale are continuously monitored during their operations by the tax authorities, SEC etc...
Of course there may be differing political opinions or stances regarding international trade and fiscal issues, but things change when they are ported to legal and investigative platforms, because those platforms work on technical grounds, not on journalists’ opinions. And apparently Irish investigation by EU led to nowhere and France tries a different course of action...
What Apple has been doing is buying iProducts from China through its Irish company. It then sells those products at a higher price to yet other Apple owned subsidiaries who then sell those same products to its Apple owned distributors across Europe like Apple Germany, Apple Italy, Apple France and so on, again at some even higher price which assures there's little profit realized when the products sell to citizens in a particular country. Those Apple-owned subsidiaries are left with just enough margin in the deal to cover their costs. Because their margins and their costs are designed to be roughly equal there's not much if any taxes to pay in the countries where the sale occurred because there's not much left in the way of profits in them. All the profits were realized far up the chain and they are substantial.
So at the end of the day those profits end up sitting in Apple Ireland, or as reported now in Apple Jersey (see Paradise Papers https://www.bbc.com/news/world-us-canada-41889787) and as such they are not taxable in the country where the transaction took place. But yeah, technically Apple is obligated to pay its taxes in the country where the profit was realized, and Apple might claim to pay all the taxes they are legally obligated to pay. It's just not the country where the retail sale happened.
Its total wrong to say that Apple Ireland is buying iProducts from China. This is a total misunderstanding of IP. The Chinese assembly factories don't own that device and don't sell it to Apple
It's a license agreement to assemble components that apple owns already. FoxConn does not own anything in the iPhone it is assembling. It doesn't own the chassis, or the software, or the CPU, or the GPU, or the GPS, or the camera, or anything else. It can't sell the assembled product. All it does is assemble bits that Apple sends it, that Apple owns by buying or building. Apple stays in ownership of all the components it allows Foxconn access to to assemble the iPhone, and the final product. This cost of assembly to Apple is about $5 per device or so, IIRC. There is no selling of an iPhone you don't own. FoxConn does not own that iPhone, or any part of it, it merely invoices Apple for the cost of assembly.
(The value added is much higher than the cost of this assembly by the way, as what adds the value to the completed iPhone is the software and the brand. Another blow to the labour theory of value).
And the assembly is one of the last steps of production, not the first.
Any yes the accounting trickery being used is generally legal. There's folks at the multinationals paid a whole lotta money for crafting some way to dodge assorted tax laws, counter to the spirit of those laws (!)
There is no accounting trickery in wholesale vs retail prices. I am sure that I have explained this before but its pretty remedial. If BMW sells cars to France via a BMW distributor fully owned by BMW, then the French treasury can only tax the retail profits of that BMW store. It has always been thus. The only trickery would be if the BMW dealership was charged a higher wholesale price than other dealers to transfer profits back to Germany ( if corporate tax were lower in Germany).
Given all that I haven't much hope in the rest of your articles, although I haven't fully linked into them.
You don't seem to be dealing, at all here, with digital services. Care to?
If a French citizen orders Apple Music on his iPhone paid for in Francs and purchased from Apple France in the Paris Apple store then where did the sale takes place, and where is the revenue recognized? There's a mismatch.
Luxembourg, obviously.
Why France?
if a developer sells an app in the App Store then he recognises revenue and profits (VAT aside which is taken at source and never gets to him) where he lives and is a tax resident. The only other option is tax returns to every single country in the world he has sold an app to. That would be a boost for accountants no doubt, but not the developer. Same rules apply.
I file taxes for my corporate activities in several jurisdictions. Some are paid on a city level, some on a county, others to a specific state and higher up the chain to the Federal Government. It often depends where the activity took place.
Some cities in the US as a more specific example require reporting and paying corporate taxes on the economic activity a company realizes from that city's citizens. Counties too might require a corporation to file a tax return and pay appropriate corporate taxes on the economic activity that takes place in that county. I think most States have their own requirement for the reporting and filing of corporate tax returns and then of course there's the federal Government.
Filing separate returns in various jurisdictions is not exactly onerous or unheard of. I'm a business owner (multiple actually) and intimately familiar with it.
That’s a hierarchical system specific to the US and other federal systems. . It’s not how international tax works. Or could ever work. I also doubt you are submitting personal or corporate tax returns to different states.
Do you actually believe this? There have been countless news stories about how Apple manipulated their operations to shift most EU profits into Ireland to minimise their tax liability. They've been fined for it before.
You cannot shift a profit. Don’t even try. Detecting profit is the most basic thing in a tax investigation. To shift a profit you have to commit rough crimes such as shill invoicing, money laundering and alike. Companies at Apple’s scale are continuously monitored during their operations by the tax authorities, SEC etc...
Of course there may be differing political opinions or stances regarding international trade and fiscal issues, but things change when they are ported to legal and investigative platforms, because those platforms work on technical grounds, not on journalists’ opinions. And apparently Irish investigation by EU led to nowhere and France tries a different course of action...
What Apple has been doing is buying iProducts from China through its Irish company. It then sells those products at a higher price to yet other Apple owned subsidiaries who then sell those same products to its Apple owned distributors across Europe like Apple Germany, Apple Italy, Apple France and so on, again at some even higher price which assures there's little profit realized when the products sell to citizens in a particular country. Those Apple-owned subsidiaries are left with just enough margin in the deal to cover their costs. Because their margins and their costs are designed to be roughly equal there's not much if any taxes to pay in the countries where the sale occurred because there's not much left in the way of profits in them. All the profits were realized far up the chain and they are substantial.
So at the end of the day those profits end up sitting in Apple Ireland, or as reported now in Apple Jersey (see Paradise Papers https://www.bbc.com/news/world-us-canada-41889787) and as such they are not taxable in the country where the transaction took place. But yeah, technically Apple is obligated to pay its taxes in the country where the profit was realized, and Apple might claim to pay all the taxes they are legally obligated to pay. It's just not the country where the retail sale happened.
Its total wrong to say that Apple Ireland is buying iProducts from China. This is a total misunderstanding of IP. The Chinese assembly factories don't own that device and don't sell it to Apple
It's a license agreement to assemble components that apple owns already. FoxConn does not own anything in the iPhone it is assembling. It doesn't own the chassis, or the software, or the CPU, or the GPU, or the GPS, or the camera, or anything else. It can't sell the assembled product. All it does is assemble bits that Apple sends it, that Apple owns by buying or building. Apple stays in ownership of all the components it allows Foxconn access to to assemble the iPhone, and the final product. This cost of assembly to Apple is about $5 per device or so, IIRC. There is no selling of an iPhone you don't own. FoxConn does not own that iPhone, or any part of it, it merely invoices Apple for the cost of assembly.
(The value added is much higher than the cost of this assembly by the way, as what adds the value to the completed iPhone is the software and the brand. Another blow to the labour theory of value).
And the assembly is one of the last steps of production, not the first.
Any yes the accounting trickery being used is generally legal. There's folks at the multinationals paid a whole lotta money for crafting some way to dodge assorted tax laws, counter to the spirit of those laws (!)
There is no accounting trickery in wholesale vs retail prices. I am sure that I have explained this before but its pretty remedial. If BMW sells cars to France via a BMW distributor fully owned by BMW, then the French treasury can only tax the retail profits of that BMW store. It has always been thus. The only trickery would be if the BMW dealership was charged a higher wholesale price than other dealers to transfer profits back to Germany ( if corporate tax were lower in Germany).
Given all that I haven't much hope in the rest of your articles, although I haven't fully linked into them.
You don't seem to be dealing, at all here, with digital services. Care to?
If a French citizen orders Apple Music on his iPhone paid for in Francs and purchased from Apple France in the Paris Apple store then where did the sale takes place, and where is the revenue recognized? There's a mismatch.
Luxembourg, obviously.
Why France?
if a developer sells an app in the App Store then he recognises revenue and profits (VAT aside which is taken at source and never gets to him) where he lives and is a tax resident. The only other option is tax returns to every single country in the world he has sold an app to. That would be a boost for accountants no doubt, but not the developer. Same rules apply.
I file taxes for my corporate activities in several jurisdictions. Some are paid on a city level, some on a county, others to a specific state and higher up the chain to the Federal Government. It often depends where the activity took place.
Some cities in the US as a more specific example require reporting and paying corporate taxes on the economic activity a company realizes from that city's citizens. Counties too might require a corporation to file a tax return and pay appropriate corporate taxes on the economic activity that takes place in that county. I think most States have their own requirement for the reporting and filing of corporate tax returns and then of course there's the federal Government.
Filing separate returns in various jurisdictions is not exactly onerous or unheard of. I'm a business owner (multiple actually) and intimately familiar with it.
That’s a hierarchical system specific to the US and other federal systems. . It’s not how international tax works. Or could ever work. I also doubt you are submitting personal or corporate tax returns to different states.
Huh? Apple submits corporate tax returns in separate independent countries all over the globe, including individual European countries. They just claim not to make any profit, subjectively speaking, in most of them.
By using an elaborate structure of subsidiaries, some of which existed only on paper and having no employees, those profits have been shifted out of taxing countries where the sales occur to foreign jurisdictions where taxes on corporate taxes are minimal, or reportedly not required at all and thus tax forms do not need to be filed revealing the extent of those tax-free accounts. Not just Apple of course. All the big multinationals have their own largely legal, sometimes skirting to close to breaking the law tax avoidance structures.
You're surprised countries are catching on and closing holes local tax agencies might not even know existed before some of these private papers and investigations were revealed?
Do you actually believe this? There have been countless news stories about how Apple manipulated their operations to shift most EU profits into Ireland to minimise their tax liability. They've been fined for it before.
You cannot shift a profit. Don’t even try. Detecting profit is the most basic thing in a tax investigation. To shift a profit you have to commit rough crimes such as shill invoicing, money laundering and alike. Companies at Apple’s scale are continuously monitored during their operations by the tax authorities, SEC etc...
Of course there may be differing political opinions or stances regarding international trade and fiscal issues, but things change when they are ported to legal and investigative platforms, because those platforms work on technical grounds, not on journalists’ opinions. And apparently Irish investigation by EU led to nowhere and France tries a different course of action...
What Apple has been doing is buying iProducts from China through its Irish company. It then sells those products at a higher price to yet other Apple owned subsidiaries who then sell those same products to its Apple owned distributors across Europe like Apple Germany, Apple Italy, Apple France and so on, again at some even higher price which assures there's little profit realized when the products sell to citizens in a particular country. Those Apple-owned subsidiaries are left with just enough margin in the deal to cover their costs. Because their margins and their costs are designed to be roughly equal there's not much if any taxes to pay in the countries where the sale occurred because there's not much left in the way of profits in them. All the profits were realized far up the chain and they are substantial.
So at the end of the day those profits end up sitting in Apple Ireland, or as reported now in Apple Jersey (see Paradise Papers https://www.bbc.com/news/world-us-canada-41889787) and as such they are not taxable in the country where the transaction took place. But yeah, technically Apple is obligated to pay its taxes in the country where the profit was realized, and Apple might claim to pay all the taxes they are legally obligated to pay. It's just not the country where the retail sale happened.
Its total wrong to say that Apple Ireland is buying iProducts from China. This is a total misunderstanding of IP. The Chinese assembly factories don't own that device and don't sell it to Apple
It's a license agreement to assemble components that apple owns already. FoxConn does not own anything in the iPhone it is assembling. It doesn't own the chassis, or the software, or the CPU, or the GPU, or the GPS, or the camera, or anything else. It can't sell the assembled product. All it does is assemble bits that Apple sends it, that Apple owns by buying or building. Apple stays in ownership of all the components it allows Foxconn access to to assemble the iPhone, and the final product. This cost of assembly to Apple is about $5 per device or so, IIRC. There is no selling of an iPhone you don't own. FoxConn does not own that iPhone, or any part of it, it merely invoices Apple for the cost of assembly.
(The value added is much higher than the cost of this assembly by the way, as what adds the value to the completed iPhone is the software and the brand. Another blow to the labour theory of value).
And the assembly is one of the last steps of production, not the first.
Any yes the accounting trickery being used is generally legal. There's folks at the multinationals paid a whole lotta money for crafting some way to dodge assorted tax laws, counter to the spirit of those laws (!)
There is no accounting trickery in wholesale vs retail prices. I am sure that I have explained this before but its pretty remedial. If BMW sells cars to France via a BMW distributor fully owned by BMW, then the French treasury can only tax the retail profits of that BMW store. It has always been thus. The only trickery would be if the BMW dealership was charged a higher wholesale price than other dealers to transfer profits back to Germany ( if corporate tax were lower in Germany).
Given all that I haven't much hope in the rest of your articles, although I haven't fully linked into them.
You don't seem to be dealing, at all here, with digital services. Care to?
If a French citizen orders Apple Music on his iPhone paid for in Francs and purchased from Apple France in the Paris Apple store then where did the sale takes place, and where is the revenue recognized? There's a mismatch.
Luxembourg, obviously.
Why France?
if a developer sells an app in the App Store then he recognises revenue and profits (VAT aside which is taken at source and never gets to him) where he lives and is a tax resident. The only other option is tax returns to every single country in the world he has sold an app to. That would be a boost for accountants no doubt, but not the developer. Same rules apply.
I file taxes for my corporate activities in several jurisdictions. Some are paid on a city level, some on a county, others to a specific state and higher up the chain to the Federal Government. It often depends where the activity took place.
Some cities in the US as a more specific example require reporting and paying corporate taxes on the economic activity a company realizes from that city's citizens. Counties too might require a corporation to file a tax return and pay appropriate corporate taxes on the economic activity that takes place in that county. I think most States have their own requirement for the reporting and filing of corporate tax returns and then of course there's the federal Government.
Filing separate returns in various jurisdictions is not exactly onerous or unheard of. I'm a business owner (multiple actually) and intimately familiar with it.
That’s a hierarchical system specific to the US and other federal systems. . It’s not how international tax works. Or could ever work. I also doubt you are submitting personal or corporate tax returns to different states.
Huh? Apple submits corporate tax returns in separate independent countries all over the globe, including individual European countries. They just claim not to make any profit, subjectively speaking, in most of them.
They submit based on their retail profits or lack thereof of all across the globe. We are going around in circles.
Let’s stick with digital services and taxation which is the topic here, and to the general tax laws on digital services.
My position is that while the consumer county can legitimately tax sales (VAT etc) on digital downloads, taxing corporate revenue is something for the tax authorities where the tax paying entity is legally tax resident.
iTunes is tax resident in Cork btw, not Luxembourg.
Cork isn't as funny; it used to be Luxembourg. Further evidence that Apple are just shifting it around for tax advantage tbh. If you think that's a decent way for a business to conduct itself then we're going to reach an impasse pretty quickly; obviously its slimy af.
Do you actually believe this? There have been countless news stories about how Apple manipulated their operations to shift most EU profits into Ireland to minimise their tax liability. They've been fined for it before.
You cannot shift a profit. Don’t even try. Detecting profit is the most basic thing in a tax investigation. To shift a profit you have to commit rough crimes such as shill invoicing, money laundering and alike. Companies at Apple’s scale are continuously monitored during their operations by the tax authorities, SEC etc...
Of course there may be differing political opinions or stances regarding international trade and fiscal issues, but things change when they are ported to legal and investigative platforms, because those platforms work on technical grounds, not on journalists’ opinions. And apparently Irish investigation by EU led to nowhere and France tries a different course of action...
What Apple has been doing is buying iProducts from China through its Irish company. It then sells those products at a higher price to yet other Apple owned subsidiaries who then sell those same products to its Apple owned distributors across Europe like Apple Germany, Apple Italy, Apple France and so on, again at some even higher price which assures there's little profit realized when the products sell to citizens in a particular country. Those Apple-owned subsidiaries are left with just enough margin in the deal to cover their costs. Because their margins and their costs are designed to be roughly equal there's not much if any taxes to pay in the countries where the sale occurred because there's not much left in the way of profits in them. All the profits were realized far up the chain and they are substantial.
So at the end of the day those profits end up sitting in Apple Ireland, or as reported now in Apple Jersey (see Paradise Papers https://www.bbc.com/news/world-us-canada-41889787) and as such they are not taxable in the country where the transaction took place. But yeah, technically Apple is obligated to pay its taxes in the country where the profit was realized, and Apple might claim to pay all the taxes they are legally obligated to pay. It's just not the country where the retail sale happened.
Its total wrong to say that Apple Ireland is buying iProducts from China. This is a total misunderstanding of IP. The Chinese assembly factories don't own that device and don't sell it to Apple
It's a license agreement to assemble components that apple owns already. FoxConn does not own anything in the iPhone it is assembling. It doesn't own the chassis, or the software, or the CPU, or the GPU, or the GPS, or the camera, or anything else. It can't sell the assembled product. All it does is assemble bits that Apple sends it, that Apple owns by buying or building. Apple stays in ownership of all the components it allows Foxconn access to to assemble the iPhone, and the final product. This cost of assembly to Apple is about $5 per device or so, IIRC. There is no selling of an iPhone you don't own. FoxConn does not own that iPhone, or any part of it, it merely invoices Apple for the cost of assembly.
(The value added is much higher than the cost of this assembly by the way, as what adds the value to the completed iPhone is the software and the brand. Another blow to the labour theory of value).
And the assembly is one of the last steps of production, not the first.
Any yes the accounting trickery being used is generally legal. There's folks at the multinationals paid a whole lotta money for crafting some way to dodge assorted tax laws, counter to the spirit of those laws (!)
There is no accounting trickery in wholesale vs retail prices. I am sure that I have explained this before but its pretty remedial. If BMW sells cars to France via a BMW distributor fully owned by BMW, then the French treasury can only tax the retail profits of that BMW store. It has always been thus. The only trickery would be if the BMW dealership was charged a higher wholesale price than other dealers to transfer profits back to Germany ( if corporate tax were lower in Germany).
Given all that I haven't much hope in the rest of your articles, although I haven't fully linked into them.
You don't seem to be dealing, at all here, with digital services. Care to?
If a French citizen orders Apple Music on his iPhone paid for in Francs and purchased from Apple France in the Paris Apple store then where did the sale takes place, and where is the revenue recognized? There's a mismatch.
Luxembourg, obviously.
Why France?
if a developer sells an app in the App Store then he recognises revenue and profits (VAT aside which is taken at source and never gets to him) where he lives and is a tax resident. The only other option is tax returns to every single country in the world he has sold an app to. That would be a boost for accountants no doubt, but not the developer. Same rules apply.
And it’s not like the consumer country is starved of tax. They can and do apply a sales tax (VAT in this case).
I'm no lover of accountants, but separate returns makes eminently more sense. That or a higher VAT on digital goods/services or a digital custom duty (the latter would be hard to get off the ground intra-EU).
Do you actually believe this? There have been countless news stories about how Apple manipulated their operations to shift most EU profits into Ireland to minimise their tax liability. They've been fined for it before.
You cannot shift a profit. Don’t even try. Detecting profit is the most basic thing in a tax investigation. To shift a profit you have to commit rough crimes such as shill invoicing, money laundering and alike. Companies at Apple’s scale are continuously monitored during their operations by the tax authorities, SEC etc...
Of course there may be differing political opinions or stances regarding international trade and fiscal issues, but things change when they are ported to legal and investigative platforms, because those platforms work on technical grounds, not on journalists’ opinions. And apparently Irish investigation by EU led to nowhere and France tries a different course of action...
What Apple has been doing is buying iProducts from China through its Irish company. It then sells those products at a higher price to yet other Apple owned subsidiaries who then sell those same products to its Apple owned distributors across Europe like Apple Germany, Apple Italy, Apple France and so on, again at some even higher price which assures there's little profit realized when the products sell to citizens in a particular country. Those Apple-owned subsidiaries are left with just enough margin in the deal to cover their costs. Because their margins and their costs are designed to be roughly equal there's not much if any taxes to pay in the countries where the sale occurred because there's not much left in the way of profits in them. All the profits were realized far up the chain and they are substantial.
So at the end of the day those profits end up sitting in Apple Ireland, or as reported now in Apple Jersey (see Paradise Papers https://www.bbc.com/news/world-us-canada-41889787) and as such they are not taxable in the country where the transaction took place. But yeah, technically Apple is obligated to pay its taxes in the country where the profit was realized, and Apple might claim to pay all the taxes they are legally obligated to pay. It's just not the country where the retail sale happened.
Its total wrong to say that Apple Ireland is buying iProducts from China. This is a total misunderstanding of IP. The Chinese assembly factories don't own that device and don't sell it to Apple
It's a license agreement to assemble components that apple owns already. FoxConn does not own anything in the iPhone it is assembling. It doesn't own the chassis, or the software, or the CPU, or the GPU, or the GPS, or the camera, or anything else. It can't sell the assembled product. All it does is assemble bits that Apple sends it, that Apple owns by buying or building. Apple stays in ownership of all the components it allows Foxconn access to to assemble the iPhone, and the final product. This cost of assembly to Apple is about $5 per device or so, IIRC. There is no selling of an iPhone you don't own. FoxConn does not own that iPhone, or any part of it, it merely invoices Apple for the cost of assembly.
(The value added is much higher than the cost of this assembly by the way, as what adds the value to the completed iPhone is the software and the brand. Another blow to the labour theory of value).
And the assembly is one of the last steps of production, not the first.
Any yes the accounting trickery being used is generally legal. There's folks at the multinationals paid a whole lotta money for crafting some way to dodge assorted tax laws, counter to the spirit of those laws (!)
There is no accounting trickery in wholesale vs retail prices. I am sure that I have explained this before but its pretty remedial. If BMW sells cars to France via a BMW distributor fully owned by BMW, then the French treasury can only tax the retail profits of that BMW store. It has always been thus. The only trickery would be if the BMW dealership was charged a higher wholesale price than other dealers to transfer profits back to Germany ( if corporate tax were lower in Germany).
Given all that I haven't much hope in the rest of your articles, although I haven't fully linked into them.
You don't seem to be dealing, at all here, with digital services. Care to?
If a French citizen orders Apple Music on his iPhone paid for in Francs and purchased from Apple France in the Paris Apple store then where did the sale takes place, and where is the revenue recognized? There's a mismatch.
Luxembourg, obviously.
Why France?
if a developer sells an app in the App Store then he recognises revenue and profits (VAT aside which is taken at source and never gets to him) where he lives and is a tax resident. The only other option is tax returns to every single country in the world he has sold an app to. That would be a boost for accountants no doubt, but not the developer. Same rules apply.
And it’s not like the consumer country is starved of tax. They can and do apply a sales tax (VAT in this case).
I'm no lover of accountants, but separate returns makes eminently more sense. That or a higher VAT on digital goods/services or a digital custom duty (the latter would be hard to get off the ground intra-EU).
So an app developer resident in the U.K. who makes $10k on downloads in 100 countries needs to file 100 different corporation tax reports to 100 countries. Despite the sheer lunacy of that, where are expenses offset?
Higher VAT is fine by me. Sales tax != corporation tax.
A government may always impose NEW taxes, there is nothing unusual with that, governments exist for a reason. Relating that to Apple’s supposedly “evasive tax maneuvers” is idiotic. The Irish investigation was not an investigation on Apple at first place, it was an investigation on the Irish State for providing “illegal state aid” because of tax incentives it provides. And that was appealed by both Apple and Irish government, putting Apple’s required payment into an escrow account until the appeal concludes. Apple has never faced a direct tax evasion charge from the EU, as far as we know. France may have decided to tax some US companies. The outcome of that will be US taking some counter measures, taxing similar French or EU companies for example. This is an issue that should be discussed under US-France/EU relations. Shifting that towards Apple’s supposedly evasive tax maneuvers is nothing more than a hate campaign.
Do you actually believe this? There have been countless news stories about how Apple manipulated their operations to shift most EU profits into Ireland to minimise their tax liability. They've been fined for it before.
You cannot shift a profit. Don’t even try. Detecting profit is the most basic thing in a tax investigation. To shift a profit you have to commit rough crimes such as shill invoicing, money laundering and alike. Companies at Apple’s scale are continuously monitored during their operations by the tax authorities, SEC etc...
Of course there may be differing political opinions or stances regarding international trade and fiscal issues, but things change when they are ported to legal and investigative platforms, because those platforms work on technical grounds, not on journalists’ opinions. And apparently Irish investigation by EU led to nowhere and France tries a different course of action...
What Apple has been doing is buying iProducts from China through its Irish company. It then sells those products at a higher price to yet other Apple owned subsidiaries who then sell those same products to its Apple owned distributors across Europe like Apple Germany, Apple Italy, Apple France and so on, again at some even higher price which assures there's little profit realized when the products sell to citizens in a particular country. Those Apple-owned subsidiaries are left with just enough margin in the deal to cover their costs. Because their margins and their costs are designed to be roughly equal there's not much if any taxes to pay in the countries where the sale occurred because there's not much left in the way of profits in them. All the profits were realized far up the chain and they are substantial.
So at the end of the day those profits end up sitting in Apple Ireland, or as reported now in Apple Jersey (see Paradise Papers https://www.bbc.com/news/world-us-canada-41889787) and as such they are not taxable in the country where the transaction took place. But yeah, technically Apple is obligated to pay its taxes in the country where the profit was realized, and Apple might claim to pay all the taxes they are legally obligated to pay. It's just not the country where the retail sale happened.
Its total wrong to say that Apple Ireland is buying iProducts from China. This is a total misunderstanding of IP. The Chinese assembly factories don't own that device and don't sell it to Apple
It's a license agreement to assemble components that apple owns already. FoxConn does not own anything in the iPhone it is assembling. It doesn't own the chassis, or the software, or the CPU, or the GPU, or the GPS, or the camera, or anything else. It can't sell the assembled product. All it does is assemble bits that Apple sends it, that Apple owns by buying or building. Apple stays in ownership of all the components it allows Foxconn access to to assemble the iPhone, and the final product. This cost of assembly to Apple is about $5 per device or so, IIRC. There is no selling of an iPhone you don't own. FoxConn does not own that iPhone, or any part of it, it merely invoices Apple for the cost of assembly.
(The value added is much higher than the cost of this assembly by the way, as what adds the value to the completed iPhone is the software and the brand. Another blow to the labour theory of value).
And the assembly is one of the last steps of production, not the first.
Any yes the accounting trickery being used is generally legal. There's folks at the multinationals paid a whole lotta money for crafting some way to dodge assorted tax laws, counter to the spirit of those laws (!)
There is no accounting trickery in wholesale vs retail prices. I am sure that I have explained this before but its pretty remedial. If BMW sells cars to France via a BMW distributor fully owned by BMW, then the French treasury can only tax the retail profits of that BMW store. It has always been thus. The only trickery would be if the BMW dealership was charged a higher wholesale price than other dealers to transfer profits back to Germany ( if corporate tax were lower in Germany).
Given all that I haven't much hope in the rest of your articles, although I haven't fully linked into them.
You don't seem to be dealing, at all here, with digital services. Care to?
If a French citizen orders Apple Music on his iPhone paid for in Francs and purchased from Apple France in the Paris Apple store then where did the sale takes place, and where is the revenue recognized? There's a mismatch.
Luxembourg, obviously.
Why France?
if a developer sells an app in the App Store then he recognises revenue and profits (VAT aside which is taken at source and never gets to him) where he lives and is a tax resident. The only other option is tax returns to every single country in the world he has sold an app to. That would be a boost for accountants no doubt, but not the developer. Same rules apply.
I file taxes for my corporate activities in several jurisdictions. Some are paid on a city level, some on a county, others to a specific state and higher up the chain to the Federal Government. It often depends where the activity took place.
Some cities in the US as a more specific example require reporting and paying corporate taxes on the economic activity a company realizes from that city's citizens. Counties too might require a corporation to file a tax return and pay appropriate corporate taxes on the economic activity that takes place in that county. I think most States have their own requirement for the reporting and filing of corporate tax returns and then of course there's the federal Government.
Filing separate returns in various jurisdictions is not exactly onerous or unheard of. I'm a business owner (multiple actually) and intimately familiar with it.
That’s a hierarchical system specific to the US and other federal systems. . It’s not how international tax works. Or could ever work. I also doubt you are submitting personal or corporate tax returns to different states.
Huh? Apple submits corporate tax returns in separate independent countries all over the globe, including individual European countries. They just claim not to make any profit, subjectively speaking, in most of them.
They submit based on their retail profits or lack thereof of all across the globe. We are going around in circles.
Let’s stick with digital services and taxation which is the topic here, and to the general tax laws on digital services.
My position is that while the consumer county can legitimately tax sales (VAT etc) on digital downloads, taxing corporate revenue is something for the tax authorities where the tax paying entity is legally tax resident.
Is Apple France not legally tax resident in France? The problem occurs because tax law is based on traditional economic activities. The new no-borders digital economy is not accounted for, but it will be.
What Apple and Google and Microsoft and other multinationals should be advocating is a worldwide effort at crafting new tax laws to prevent what will assuredly become a hodgepodge of local and regional tax laws and requirements targeting digital services in the absence of wide agreement by the countries most involved. Digital services are going to be taxed, and in the countries where those services are delivered. US techs, the primary beneficiaries of the lack of current tax obligations re:digital delivery, had better all be on on the same page and work together.
iTunes is tax resident in Cork btw, not Luxembourg.
I think he was making a joke.
FWIW iTunes might now be a 'resident" of the Jersey Isles for tax purposes.
I’m totally unconvinced by that jersey claim as well but I haven’t linked to it yet.
You mean the one Apple issued the PR paper admitting to and attempting to explain the reasons for doing it? THAT Jersey claim? If you going to doubt Apple's own admissions I think the conversation has gone as far as it can. Your entrenchment is burying honesty and facts.
Do you actually believe this? There have been countless news stories about how Apple manipulated their operations to shift most EU profits into Ireland to minimise their tax liability. They've been fined for it before.
You cannot shift a profit. Don’t even try. Detecting profit is the most basic thing in a tax investigation. To shift a profit you have to commit rough crimes such as shill invoicing, money laundering and alike. Companies at Apple’s scale are continuously monitored during their operations by the tax authorities, SEC etc...
Of course there may be differing political opinions or stances regarding international trade and fiscal issues, but things change when they are ported to legal and investigative platforms, because those platforms work on technical grounds, not on journalists’ opinions. And apparently Irish investigation by EU led to nowhere and France tries a different course of action...
What Apple has been doing is buying iProducts from China through its Irish company. It then sells those products at a higher price to yet other Apple owned subsidiaries who then sell those same products to its Apple owned distributors across Europe like Apple Germany, Apple Italy, Apple France and so on, again at some even higher price which assures there's little profit realized when the products sell to citizens in a particular country. Those Apple-owned subsidiaries are left with just enough margin in the deal to cover their costs. Because their margins and their costs are designed to be roughly equal there's not much if any taxes to pay in the countries where the sale occurred because there's not much left in the way of profits in them. All the profits were realized far up the chain and they are substantial.
So at the end of the day those profits end up sitting in Apple Ireland, or as reported now in Apple Jersey (see Paradise Papers https://www.bbc.com/news/world-us-canada-41889787) and as such they are not taxable in the country where the transaction took place. But yeah, technically Apple is obligated to pay its taxes in the country where the profit was realized, and Apple might claim to pay all the taxes they are legally obligated to pay. It's just not the country where the retail sale happened.
Its total wrong to say that Apple Ireland is buying iProducts from China. This is a total misunderstanding of IP. The Chinese assembly factories don't own that device and don't sell it to Apple
It's a license agreement to assemble components that apple owns already. FoxConn does not own anything in the iPhone it is assembling. It doesn't own the chassis, or the software, or the CPU, or the GPU, or the GPS, or the camera, or anything else. It can't sell the assembled product. All it does is assemble bits that Apple sends it, that Apple owns by buying or building. Apple stays in ownership of all the components it allows Foxconn access to to assemble the iPhone, and the final product. This cost of assembly to Apple is about $5 per device or so, IIRC. There is no selling of an iPhone you don't own. FoxConn does not own that iPhone, or any part of it, it merely invoices Apple for the cost of assembly.
(The value added is much higher than the cost of this assembly by the way, as what adds the value to the completed iPhone is the software and the brand. Another blow to the labour theory of value).
And the assembly is one of the last steps of production, not the first.
Any yes the accounting trickery being used is generally legal. There's folks at the multinationals paid a whole lotta money for crafting some way to dodge assorted tax laws, counter to the spirit of those laws (!)
There is no accounting trickery in wholesale vs retail prices. I am sure that I have explained this before but its pretty remedial. If BMW sells cars to France via a BMW distributor fully owned by BMW, then the French treasury can only tax the retail profits of that BMW store. It has always been thus. The only trickery would be if the BMW dealership was charged a higher wholesale price than other dealers to transfer profits back to Germany ( if corporate tax were lower in Germany).
Given all that I haven't much hope in the rest of your articles, although I haven't fully linked into them.
You don't seem to be dealing, at all here, with digital services. Care to?
If a French citizen orders Apple Music on his iPhone paid for in Francs and purchased from Apple France in the Paris Apple store then where did the sale takes place, and where is the revenue recognized? There's a mismatch.
Luxembourg, obviously.
Why France?
if a developer sells an app in the App Store then he recognises revenue and profits (VAT aside which is taken at source and never gets to him) where he lives and is a tax resident. The only other option is tax returns to every single country in the world he has sold an app to. That would be a boost for accountants no doubt, but not the developer. Same rules apply.
And it’s not like the consumer country is starved of tax. They can and do apply a sales tax (VAT in this case).
I'm no lover of accountants, but separate returns makes eminently more sense. That or a higher VAT on digital goods/services or a digital custom duty (the latter would be hard to get off the ground intra-EU).
So an app developer resident in the U.K. who makes $10k on downloads in 100 countries needs to file 100 different corporation tax reports to 100 countries. Despite the sheer lunacy of that, where are expenses offset?
Higher VAT is fine by me. Sales tax != corporation tax.
Is it lunacy, or could it be the price of selling in 100 countries?
Traditionally foreign companies either set up a local corporation, and therefore submit a return, or they get whacked with customs duties. The digital economy seems to have escaped both, and is now being cottoned on to.
Not sure what corporation tax has to do with the conversation.
A government may always impose NEW taxes, there is nothing unusual with that, governments exist for a reason. Relating that to Apple’s supposedly “evasive tax maneuvers” is idiotic. The Irish investigation was not an investigation on Apple at first place, it was an investigation on the Irish State for providing “illegal state aid” because of tax incentives it provides...
France may have decided to tax some US companies. The outcome of that will be US taking some counter measures, taxing similar French or EU companies for example. This is an issue that should be discussed under US-France/EU relations. Shifting that towards Apple’s supposedly evasive tax maneuvers is nothing more than a hate campaign.
It is no wonder you post so much misinformation. You yourself are apparently unaware of the facts, either making it up on the fly or not remembering what had happened. You're very mistaken, but perhaps honestly so. I'll remind you.
The EU investigation of Ireland's unusual tax agreements with different companies was prompted by an earlier US investigation that began in 2012 of how Apple along with others has been able to avoid so much of the tax obligation that applies to the vast majority of US businesses. Yes the entire exercise started out as a US Senate examination of US-based companies avoiding US taxes, Apple being the largest, wealthiest and most specific beneficiary of it and testifying under oath in 2013.
The tax investigation into Apple came first. The EU's look at Ireland's part in it flowed out of that.
EDIT: A timely article from yesterday on the topic of crafting digital economy tax laws. There's no "US counter-measures" that can stem the push towards more equitably spreading the tax base of digital services. https://www.nytimes.com/2019/07/15/opinion/france-internet-tax.html
A government may always impose NEW taxes, there is nothing unusual with that, governments exist for a reason. Relating that to Apple’s supposedly “evasive tax maneuvers” is idiotic. The Irish investigation was not an investigation on Apple at first place, it was an investigation on the Irish State for providing “illegal state aid” because of tax incentives it provides...
France may have decided to tax some US companies. The outcome of that will be US taking some counter measures, taxing similar French or EU companies for example. This is an issue that should be discussed under US-France/EU relations. Shifting that towards Apple’s supposedly evasive tax maneuvers is nothing more than a hate campaign.
It is no wonder you post so much misinformation. You yourself are apparently unaware of the facts, either making it up on the fly or not remembering what had happened. You're very mistaken, but perhaps honestly so. I'll remind you.
The EU investigation of Ireland's unusual tax agreements with different companies was prompted by an earlier US investigation that began in 2012 of how Apple along with others has been able to avoid so much of the tax obligation that applies to the vast majority of US businesses. Yes the entire exercise started out as a US Senate examination of US-based companies avoiding US taxes, Apple being the largest, wealthiest and most specific beneficiary of it and testifying under oath in 2013.
The tax investigation into Apple came first. The EU's look at Ireland's part in it flowed out of that.
EDIT: A timely article from yesterday on the topic of crafting digital economy tax laws. There's no "US counter-measures" that can stem the push towards more equitably spreading the tax base of digital services. https://www.nytimes.com/2019/07/15/opinion/france-internet-tax.html
Investigation does not mean charge. Tweaking notions and facts, presenting “investigation” and “examination” as prosecution are typical “grey propaganda”. I won’t be part of your hate campaign by replying to you, stop calling me with “@“.
Is there any court decision that sentences Apple with tax evasion? No, then shut the f-up.
Comments
BTW you quite obviously did not read the article I linked for you explaining why Foxconn would be billing Apple for a completed iDevice which they factually are, and not just the cost of assembly. It all plays into tax avoidance, definition of imports and exports, and where profits are realized along the chain of transactions. I've always considered you a much better reader and more than a bit surprised you'd be sticking to your own interpretation steadfastly instead of what was factually found during a Senate investigation. Reading the offered links hasn't made you question your understanding of it all, at least a tiny bit? Hard to believe it hasn't.
if a developer sells an app in the App Store then he recognises revenue and profits (VAT aside which is taken at source and never gets to him) where he lives and is a tax resident. The only other option is tax returns to every single country in the world he has sold an app to. That would be a boost for accountants no doubt, but not the developer. Same rules apply.
And it’s not like the consumer country is starved of tax. They can and do apply a sales tax (VAT in this case).
Some cities in the US as a more specific example require reporting and paying corporate taxes on the economic activity a company realizes from that city's citizens. Counties too might require a corporation to file a tax return and pay appropriate corporate taxes on the economic activity that takes place in that county. I think most States have their own requirement for the reporting and filing of corporate tax returns and then of course there's the federal Government.
Filing separate returns in various jurisdictions is not exactly onerous or unheard of. I'm a business owner (multiple actually) and intimately familiar with it.
FWIW iTunes might now be a 'resident" of the Jersey Isles for tax purposes.
By using an elaborate structure of subsidiaries, some of which existed only on paper and having no employees, those profits have been shifted out of taxing countries where the sales occur to foreign jurisdictions where taxes on corporate taxes are minimal, or reportedly not required at all and thus tax forms do not need to be filed revealing the extent of those tax-free accounts. Not just Apple of course. All the big multinationals have their own largely legal, sometimes skirting to close to breaking the law tax avoidance structures.
You're surprised countries are catching on and closing holes local tax agencies might not even know existed before some of these private papers and investigations were revealed?
Let’s stick with digital services and taxation which is the topic here, and to the general tax laws on digital services.
My position is that while the consumer county can legitimately tax sales (VAT etc) on digital downloads, taxing corporate revenue is something for the tax authorities where the tax paying entity is legally tax resident.
Higher VAT is fine by me. Sales tax != corporation tax.
What Apple and Google and Microsoft and other multinationals should be advocating is a worldwide effort at crafting new tax laws to prevent what will assuredly become a hodgepodge of local and regional tax laws and requirements targeting digital services in the absence of wide agreement by the countries most involved. Digital services are going to be taxed, and in the countries where those services are delivered. US techs, the primary beneficiaries of the lack of current tax obligations re:digital delivery, had better all be on on the same page and work together.
Traditionally foreign companies either set up a local corporation, and therefore submit a return, or they get whacked with customs duties. The digital economy seems to have escaped both, and is now being cottoned on to.
Not sure what corporation tax has to do with the conversation.
The EU investigation of Ireland's unusual tax agreements with different companies was prompted by an earlier US investigation that began in 2012 of how Apple along with others has been able to avoid so much of the tax obligation that applies to the vast majority of US businesses. Yes the entire exercise started out as a US Senate examination of US-based companies avoiding US taxes, Apple being the largest, wealthiest and most specific beneficiary of it and testifying under oath in 2013.
The tax investigation into Apple came first. The EU's look at Ireland's part in it flowed out of that.
EDIT: A timely article from yesterday on the topic of crafting digital economy tax laws. There's no "US counter-measures" that can stem the push towards more equitably spreading the tax base of digital services.
https://www.nytimes.com/2019/07/15/opinion/france-internet-tax.html
Is there any court decision that sentences Apple with tax evasion? No, then shut the f-up.