Like Apple, Google & Yahoo also avoid taxes by way of Ireland
Though they weren't grilled before a U.S. Senate subcommittee on Tuesday like Apple, Google and Yahoo rely on Irish subsidiaries to avoid taxes on billions of dollars in income, and they go one step further than Apple by utilizing offshore accounts.
Executives from Apple were called before the U.S. Senate Permanent Subcommittee on Investigations on Tuesday to respond to accusations of elaborate tax avoidance practices through a trio of subsidiaries based in Ireland. Apple Chief Executive Tim Cook told the committee that he was there of his own free will, compelled to appear because he wanted to personally give his side of the story.
Though some such as U.S. Sen. Carl Levin (D-Mich.) portrayed Apple's tax strategy as "unique," at least in scope, the tax shelter practice known by attorneys as the "Double Irish" is also utilized by tech companies Google and Yahoo.
Google has moved foreign profits through Ireland and the Netherlands, allowing to avoid about $2 billion in income taxes a year, according to Bloomberg. But unlike Apple, which manages its Irish subsidiary in the U.S., Google goes one step further and manages its Irish branch through Bermuda ? a British territory that has no corporate income tax.
Yahoo, too, is said to deposit its profits in an Irish subsidiary. Like Apple, Yahoo says its Irish arm is not a tax resident to avoid corporate income taxes. But Yahoo also employs a strategy similar to Google and claims its tax residency offshore, in the Cayman Islands.
Apple executives made it a point to differentiate themselves from those types of strategies in their official testimony this week. Specifically, the company noted it does not hold money on a Caribbean island, or have a bank account in the Cayman Islands.
With Tuesday's hearing, the U.S. Senate subcommittee took issue with current incompatibilities between U.S. and Irish tax laws. In Ireland, only companies that are managed and controlled in Ireland are considered tax residents. And in the U.S., tax laws are based on where a company is incorporated, rather than where it is managed and controlled.
Companies like Apple, Google and Yahoo have incorporated their subsidiaries in Ireland and managed those operations elsewhere to avoid corporate income taxes. But while Google and Yahoo manage their Irish subsidiaries overseas, Apple has instead controlled its operations from the company's corporate headquarters in Cupertino, Calif.
Wednesday's report from Bloomberg also noted that Yahoo has funneled hundreds of millions of dollars in profits through a Dutch bookkeeper's suburban home office. That money is then passed on to subsidiaries located in Mauritius and Switzerland.
Apple and Google, along with Amazon, were also faced with tax scrutiny in a report from the U.K. last year, which noted numerous companies take advantage of low tax rates in Ireland. A government investigation found that Amazon did not pay any British corporation tax in 2010 or 2011 by switching its European headquarters to Luxembourg.
Executives from Apple were called before the U.S. Senate Permanent Subcommittee on Investigations on Tuesday to respond to accusations of elaborate tax avoidance practices through a trio of subsidiaries based in Ireland. Apple Chief Executive Tim Cook told the committee that he was there of his own free will, compelled to appear because he wanted to personally give his side of the story.
Though some such as U.S. Sen. Carl Levin (D-Mich.) portrayed Apple's tax strategy as "unique," at least in scope, the tax shelter practice known by attorneys as the "Double Irish" is also utilized by tech companies Google and Yahoo.
Google has moved foreign profits through Ireland and the Netherlands, allowing to avoid about $2 billion in income taxes a year, according to Bloomberg. But unlike Apple, which manages its Irish subsidiary in the U.S., Google goes one step further and manages its Irish branch through Bermuda ? a British territory that has no corporate income tax.
Yahoo, too, is said to deposit its profits in an Irish subsidiary. Like Apple, Yahoo says its Irish arm is not a tax resident to avoid corporate income taxes. But Yahoo also employs a strategy similar to Google and claims its tax residency offshore, in the Cayman Islands.
Unlike Google or Yahoo, Apple does not hold money on a Caribbean Island or have a bank account in the Cayman Islands.
Apple executives made it a point to differentiate themselves from those types of strategies in their official testimony this week. Specifically, the company noted it does not hold money on a Caribbean island, or have a bank account in the Cayman Islands.
With Tuesday's hearing, the U.S. Senate subcommittee took issue with current incompatibilities between U.S. and Irish tax laws. In Ireland, only companies that are managed and controlled in Ireland are considered tax residents. And in the U.S., tax laws are based on where a company is incorporated, rather than where it is managed and controlled.
Companies like Apple, Google and Yahoo have incorporated their subsidiaries in Ireland and managed those operations elsewhere to avoid corporate income taxes. But while Google and Yahoo manage their Irish subsidiaries overseas, Apple has instead controlled its operations from the company's corporate headquarters in Cupertino, Calif.
Wednesday's report from Bloomberg also noted that Yahoo has funneled hundreds of millions of dollars in profits through a Dutch bookkeeper's suburban home office. That money is then passed on to subsidiaries located in Mauritius and Switzerland.
Apple and Google, along with Amazon, were also faced with tax scrutiny in a report from the U.K. last year, which noted numerous companies take advantage of low tax rates in Ireland. A government investigation found that Amazon did not pay any British corporation tax in 2010 or 2011 by switching its European headquarters to Luxembourg.
Comments
Somewhere in the world, a gang of bank robbers are thinking, "Ireland? Billions?"
This is nothing more than the greedy US government needing money that non-government agencies, or even private citizens, have. The government has no right to Apple or Google's funds that they have EARNED. The government did not contribute a damn thing to their research, development, investments, planning, production or marketing and sales of products. It is an insult that the government with the biggest debt in the history of mankind on this planet, and still spending like there's no tomorrow, has the audacity to question the financial practices of the most valuable company in the world and tell them what they are doing wrong. They should be at the feet of Apple, Exxon, Google, Johnson & Johnson, Coca Cola, Walmart and other successful businesses begging them for advice, and listening to it. Pathetic.
I can't even see the old post about it on here any more.
Quote:
Originally Posted by thebudda
They should be at the feet of Apple, Exxon, Google, Johnson & Johnson, Coca Cola, Walmart and other successful businesses begging them for advice, and listening to it. Pathetic.
They're already are. The Corporate States of America is run by the Corporates through Lobbyists. People don't run for office because they want to help the community, they ran for office because of the money that pours in from lobbyists.
Quote:
Originally Posted by thebudda
The government did not contribute a damn thing to their research, development, investments, planning, production or marketing and sales of products.
What have the Romans ever done for us? Well, yes, apart from the roads. And the education system. Oh, and the sewage system.
Quote:
Originally Posted by RichL
What have the Romans ever done for us? Well, yes, apart from the roads. And the education system. Oh, and the sewage system.
I see what you're doing there. I'll assume most others aren't dumb enough to fall for it (but I could be wrong on that.)
Quote:
Originally Posted by dbtinc
Leave it to the US government to permit the destruction of our manufacturing industry...
If corporation tax is being aggressively avoided then government has a right to investigate and take measures to close the avenues for avoidance, as the incorporation agreement has been compromised.
My two cents.
Quote:
Originally Posted by thebudda
This is nothing more than the greedy US government needing money that non-government agencies, or even private citizens, have. The government has no right to Apple or Google's funds that they have EARNED. The government did not contribute a damn thing to their research, development, investments, planning, production or marketing and sales of products. It is an insult that the government with the biggest debt in the history of mankind on this planet, and still spending like there's no tomorrow, has the audacity to question the financial practices of the most valuable company in the world and tell them what they are doing wrong. They should be at the feet of Apple, Exxon, Google, Johnson & Johnson, Coca Cola, Walmart and other successful businesses begging them for advice, and listening to it. Pathetic.
Except the government is responsible for building the roads that deliver Apple's products, the government also set up the system that educated many of the people who work at Apple. The government also make the laws that mean Apple can sue when Samsung infringes their IP. Apple move that IP to other countries & rent it back to decrease their tax bill, is that a reasonable way to do buisness, move assets to places tax is lower despite creating the IP in the US?
The same government pays for the courts & prison that stop people walking into Apple stores, factories & taking the products without paying.
Go to countries where governments have less power & see what companies do, like Coca Cola in El Salvador, buying sugar cane from farmers who employ children, bullying Colombian street vendors out of unions (that help them get fair pay & healthcare) or depleting water tables in India. How about the biggest industrial disaster caused by Union Carbide in Bohpal. Or Shell's leaky pipelines ruining farmland in Nigeria, not to mention the lovely mess in the Gulf of Mexico that BP made.
Johnson & Johnson also refused to pay disability benefits for long term employees, attempted to sue the Red Cross for trademark infringement, sound like they are the good guy, not in the least bit greedy?
You seem to think the government is the bad guy here, but big business is full of unscrupulous people who are willing to exploit the planet & other people for their own gain. I suspect you wouldn't be in the same position if the companies were the ones running the world, go find the real budda, you are not him.
Quote:
Originally Posted by RichL
What have the Romans ever done for us? Well, yes, apart from the roads. And the education system. Oh, and the sewage system.
Yeah, and look what Roman taxation did -- the over taxation of the people lead to the eventual downfall of the Empire. On the upside you didn't have to understand some ridiculously complicated tax code that applied differently to damn near everyone, they just took a percentage (a really BIG percentage) from everyone.
I was going to reply like "Droid" did, but then I wasn't too sure if "thebudda" was being sarcastic or not. After all governments do provide a ton of services that people and businesses take for granted - roads, sewers, clean water, law & order, etc., etc. etc..
Really, there is no one at fault here. Apple pays over 7 Billion in taxes to the US, so they do pay taxes. And we all try to avoid paying more taxes than we have to using legal means. Apple is paying it's taxes. On the other hand governments entice businesses to their own countries so that jobs are provided. That's what Ireland has done.
Quote:
Originally Posted by Droid
Except the government is responsible for building the roads that deliver Apple's products, the government also set up the system that educated many of the people who work at Apple. The government also make the laws that mean Apple can sue when Samsung infringes their IP. Apple move that IP to other countries & rent it back to decrease their tax bill, is that a reasonable way to do buisness, move assets to places tax is lower despite creating the IP in the US?
In addition, and to relate this more to Apple's products, government is responsible for the internet through DARPA, and the web, through CERN. Government regulates the cellular spectrum so that Apple can sell just a small number of variants that will work almost worldwide. Government funding of Bletchley Park led to the computing breakthroughs that made the modern computing industry possible.
Government did not contribute a damn thing? Fantasy.
Quote:
Originally Posted by thebudda
This is nothing more than the greedy US government needing money that non-government agencies, or even private citizens, have. The government has no right to Apple or Google's funds that they have EARNED. The government did not contribute a damn thing to their research, development, investments, planning, production or marketing and sales of products. It is an insult that the government with the biggest debt in the history of mankind on this planet, and still spending like there's no tomorrow, has the audacity to question the financial practices of the most valuable company in the world and tell them what they are doing wrong. They should be at the feet of Apple, Exxon, Google, Johnson & Johnson, Coca Cola, Walmart and other successful businesses begging them for advice, and listening to it. Pathetic.
You're parroting the same thing, yet you ignore the fact that these companies depend on the court system, banking system, military, and diplomatic work. Perhaps you should consider some of this before mindlessly jumping to extremes.
Quote:
Originally Posted by thebudda
The government has no right to Apple or Google's funds that they have EARNED. The government did not contribute a damn thing to their research, development, investments, planning, production or marketing and sales of products
I'm all for smaller less wasteful government - and a smaller federal government with truly limited powers. But the statement above goes too far. The government (federal, state, and local) provides services these companies - and all citizens - rely on. Roads, bridges, fire departments, port inspections, treaty negotiation, standards development & enforcement, defense, and on and on. All those things get paid for with taxes.
"Taxes are the price we pay for a civilized society." - Oliver Wendell Holmes, Jr.
To say that the government "did not contribute a damn thing" is naive at best.
I do not blame Apple and any other company for reducing their tax burden as much as legally possible. If the laws are exploitable in unintended ways, then the government has the duty to fix those "loopholes". The companies have no obligation to say, "Oh, sorry, you didn't mean for us to do what these laws allow? Our bad. Here's more money."
- Jasen.
P.S. If we've all been trolled, he was very effective. Good catch.
Quote:
Originally Posted by Damn_Its_Hot
Yeah, and look what Roman taxation did -- the over taxation of the people lead to the eventual downfall of the Empire.
Yeah, the downfall of one of the greatest empires the world has ever seen is attributable to a single thing as simple as taxation
History runs to a different beat for anti-tax libertarians, doesn't it?
Except that Apple is not evading anything, Apple is simply leveraging Ireland as the EU's most attractive location for this particular purpose and has been there for over 30 years.
If the US government wants to give incentives to companies to actually bring more foreign money into the US, don't double tax it at 35%, this way no sane person rightfully wants to bring any of it into the country.
At the same time, it is absolutely not the US government's business to judge about foreign tax rates, this is a problem to be dealt with within the EU. This is not US money, this is foreign money rightfully taxed where it was earned and the US government is not entitled to any of it. This is huge bullshit.
It is also stupid to hit at those EU headquarters, every multinational company has them and it really doesn't matter in which country they are located. If it wasn't Ireland it might have been any other EU country and the US government wouldn't get a penny of sales in the EU either.
Not sure what they are imagining...
Quote:
Originally Posted by Droid
Except the government is responsible for building the roads that deliver Apple's products, the government also set up the system that educated many of the people who work at Apple. The government also make the laws that mean Apple can sue when Samsung infringes their IP. Apple move that IP to other countries & rent it back to decrease their tax bill, is that a reasonable way to do buisness, move assets to places tax is lower despite creating the IP in the US?
The same government pays for the courts & prison that stop people walking into Apple stores, factories & taking the products without paying. ...
The same government set up this quagmire of a tax code that now needs to be reformed. I dare say that the lobbyist for the tax lawyers and corporate accountants are probably the biggest impediment to the reform of the US tax laws.