I just can't back Cook or Apple on this one, they are in the wrong. Also, if by 'anti-American', Cook means, 'anti-American *corporation*', then I don't think that's necessarily a bad thing. We already have enough co-mingling of corporate and political interests here in the States (and the definition of 'corporate' very much includes Silicon Valley), I've been happy to see the resistance in other countries to efforts on the part of Google etc. at infiltration.
I very much agree with JoeBanks, this smacks more of being petulant than being some kind of ethical crusade.
There needs to be a worldwide clampdown on aggressive tax avoidance for ALL corporations. It's right and fair.
C'mon, no one serious here would quarrel with that. That is not the argument here. Please don't set up straw men.
I listened to Tim Cook trying to defend Apple's pitifully low tax rate on the BBC news this morning and it just sounded bad. Very bad PR. Attacking the EU is very unwise. All the people whose businesses pay tax at 20% are looking at this and saying why should Apple pay tax at less than 1%. As a life-long Apple evangelist, even I find this Apple hard to swallow.
Apple is based in the U.S. They should not have to incorporate everywhere they do business. Thus they should really only be paying taxes in the U.S.
No value is added in the EU, they are just a consumer. So the taxes should rightfully be applied upstream - either to the US, where the product was designed and developed, or in China where the product was built. (or Ireland where the R&D is performed *cough*).
Whether 'value' is added or not is simply irrelevant. This is just what Apple want you to believe to support their argument.
Taxes are charged where profit is made. If Apple makes $XXB profit from their sales in Europe they should pay the appropriate rate of corporation tax on those profits ($XXB x 12.5% for example).
It really is as simple as that.
No, it's not. You should try and figure out the differences -- this happens with every country, not just Ireland, and with every company, not just Apple -- between the statutory tax rate and the effective tax rate. Every government has loaded up its tax codes with junk that results in an actual number that is very different from what they say their statutory rate is.
If you want to have a serious discussion about corporate taxes -- after all, you're the one saying that there should be an "aggressive clampdown on corporate tax avoidance" -- then please at least take the trouble to figure out some basics.
I listened to Tim Cook trying to defend Apple's pitifully low tax rate on the BBC news this morning and it just sounded bad. Very bad PR. Attacking the EU is very unwise. All the people whose businesses pay tax at 20% are looking at this and saying why should Apple pay tax at less than 1%. As a life-long Apple evangelist, even I find this Apple hard to swallow.
Apple is based in the U.S. They should not have to incorporate everywhere they do business. Thus they should really only be paying taxes in the U.S.
Exactly, they should, but they don't pay enough tax in the US. They have set up in the EU precisely to avoid paying tax in the US, therefore they should pay tax in the EU. They can't have it both ways
Has anyone noticed that this may be the "thin end of the wedge" because if it works and they force APPL to pay something , then the floodgates will open : MSFT, SBUX, FB, GOOG, etc etc.
I listened to Tim Cook trying to defend Apple's pitifully low tax rate on the BBC news this morning and it just sounded bad. Very bad PR. Attacking the EU is very unwise. All the people whose businesses pay tax at 20% are looking at this and saying why should Apple pay tax at less than 1%. As a life-long Apple evangelist, even I find this Apple hard to swallow.
Apple is based in the U.S. They should not have to incorporate everywhere they do business. Thus they should really only be paying taxes in the U.S.
So EU citizens who come to work in the US shouldn't have to pay taxes to the US government, but should only pay them to their home governments?
The main reason Apple are in Ireland is so that they are inside the EU where they can add the all-important intellectual property to their goods so that they can claim they originate from within the EU so can be exempted from a 20% import tarif.
There is nothing to stop Apple from importing finished product from their US parent and selling it in the EU - then they would have to pay taxes directly to the US government. They would also have to pay a 20% import Tarif on bringing those finished goods into the EU, though.
Apple is based in the U.S. They should not have to incorporate everywhere they do business. Thus they should really only be paying taxes in the U.S.
Yes, in theory everyone could just buy their Apple stuff from Apple.com and have it shipped from the US but that's not really practical. How could they operate 100's of Apple Stores in Europe without having proper locally based subsidiaries set up?
Why the sour face Tim? Why the harsh words? Just simply tell how much profits were made and we'll calculate how does 400 millions stand into it. There's no TTIP yet and there's hardly likely to be any at all, so corporations should get used to pay taxes, sooner or later. Furthermore, let us know, how much of corporate tax is in this 400 mil? I have a feeling that not much. Mostly social taxes and VAT, right?
Apple had zero plans to ever 'bring it on home". Taxes on it were not deferred.
You are quite wrong about that. Cook is already suggesting that Apple will bring a lot of it back to the US in 2017. You can look it up, if you wish.
Some of it had taxes deferred. Those are the funds they expect to someday "bring home". At least $100B of it as of 2012, which at the time was the majority of Apple's cash holdings, was considered permanently invested overseas with no allowance for future US taxes. You can look it up for yourself if you're so certain I'm wrong. I think you find you are the one mistaken.
Your post makes no sense at all. I mean that in full honesty. I have no idea what you're talking about! And I think I know a little bit about this stuff. Are you taking about temporary differences or permanent differences? What part of those 'funds' is the former, what part the latter? Where can I find that distinction in Apple's financials?
Does a company make an allowance for US deferred taxes on funds that are permanently invested overseas? I don't believe so. Why would they? Permanent is certainly not temporary.
I agree you know a little about this stuff. You might benefit by looking into it more if you are so certain of your position. I have but I remember you don't like, or at least have time for, following links I offer you. Just look it up when you have the free time. I will give you a hint on where to start looking tho. First find Apple's 10K for fiscal 2012 (ending Sept/12), and secondly Apple's 10Q that covered the first half of 2013 (ending March/13)
Again, your post makes no sense at all. Do you know that deferred taxes cause only two two types of difference between disclosure books (what they say they paid) and tax books (what they actually paid)? Temporary and permanent. Please take a moment to understand what they mean, what types of transactions fall into which category, and then tell us how "Apple might keep its money abroad forever" (whatever the heck that means).
If anyone should be looking up some basic links, it is you I am afraid.
Talk about not connecting dots (ref. your post #81 above). Sheesh...
Just look for those two documents Anant. Other tax professionals have already done the math on it but you should look for yourself. I'm certainly no authority and if you find something different there than Apple stating $102B is permanently invested overseas, not subject to US taxes (and thus no allowance for deferred taxes) then let me know.
In the meantime I stand by the documented evidence from Apple themselves that they have no intention of repatriating the bulk of their foreign held cash, at least as of 2013. If something changed and they suddenly and massively increased their deferred tax allowance in anticipation of bringing it all back to the US then simply point it out. I'm not so arrogant that I won't permit myself to learn something I did not know when we started the conversation.
Again, and in serious humility an honesty, I have completely lost you. I don't know what you're trying to say. (And apparently the same is true for you vis-a-vis my post about Apple's retained earnings and foregone investments in the EU). Let's leave it at that?
From the 2013 10-K: "The Company’s (Apple) effective tax rates (some of which is deferred) for all years differ from the statutory federal income tax rate of 35% due primarily to certain undistributed foreign earnings, a substantial portion of which was generated by subsidiaries organized in Ireland, for which no U.S. taxes are provided because such earnings are intended to be indefinitely reinvested outside the U.S."
EDIT: And a more recent one, 2015 Substantially all of the Company’s undistributed international earnings intended to be indefinitely reinvested in operations outside the U.S. were generated by subsidiaries organized in Ireland, which has a statutory tax rate of 12.5%. As of September 26, 2015, U.S. income taxes have not been provided on a cumulative total of $91.5 billion of such earnings. The amount of unrecognized deferred tax liability related to these temporary differences is estimated to be $30.0 billion.
I cannot believe the unreasonableness of the responses to many of these issues coming up in the new recently. I will speak in generalities in an attempt to avoid flames from emotionally connected readers. You have to follow the rules that are on the books. If you don't like the rules (loopholes) fight to get them changed (plugged). There is a process in order to change the rules and retroactive implementation leads to chaos because strategy and decisions are made based on those established rules. Reading all these entitled, misinformed, logically flawed opinions leaves no wonder why our economy, politics, country & world is in such a mess. Is this the new normal?
I cannot believe the unreasonableness of the responses to many of these issues coming up in the new recently. I will speak in generalities in an attempt to avoid flames from emotionally connected readers. You have to follow the rules that are on the books. If you don't like the rules (loopholes) fight to get them changed (plugged). There is a process in order to change the rules and retroactive implementation leads to chaos because strategy and decisions are made based on those established rules. Reading all these entitled, misinformed, logically flawed opinions leaves no wonder why our economy, politics, country & world is in such a mess. Is this the new normal?
I listened to Tim Cook trying to defend Apple's pitifully low tax rate on the BBC news this morning and it just sounded bad. Very bad PR. Attacking the EU is very unwise. All the people whose businesses pay tax at 20% are looking at this and saying why should Apple pay tax at less than 1%. As a life-long Apple evangelist, even I find this Apple hard to swallow.
Same here, I'm generally a fan of Apple and I voted for Brexit so I'm no EU-lover. But I just can't see how anyone can defend what Apple is doing here, for a company that prides itself on making people's lives better, focussing on customers rather than shareholders (apparently), being a eco-friendly company, doing the "right thing" when it comes to slave labour and child labour in china, taking part in charitable donations & events etc. etc. to then claim it's OK to pay 0.005% tax when every other company has to pay 12%+. Especially considering Apple's vast wealth.
The Irish government as present has not yet appealed - the finance minister stated his intention to but is currently struggling to garner enough support within the government to push it through. Indeed the people of ireland are not looking on this favourably after suffering years of cut-backs and austerity to find the government giving sweetener deals to large multinational companies and possibly REFUSING billions in backdated tax which could pay for schools, housing, hospitals etc. etc.
To an outsider, the United States appear more and more xenophobic with each passing day. If Trump succeeds, I can see USA becoming more like North Korea or to a lesser extent, a mini Russia.
Well.... You seem to be swallowing the ".005%" line, which sounds like a crock of shit. Tim says that in that period they paid $400 million in taxes in that area... unless my math is wrong (it isn't); they would've had to be paying on $8 trillion (that's trillion, with a t) for the .005% to be true. Lol; both figures can't be true. If they can show they payed the $400 million they claim. Your reason for feeling they are doing something wrong is nullified.
I listened to Tim Cook trying to defend Apple's pitifully low tax rate on the BBC news this morning and it just sounded bad. Very bad PR. Attacking the EU is very unwise. All the people whose businesses pay tax at 20% are looking at this and saying why should Apple pay tax at less than 1%. As a life-long Apple evangelist, even I find this Apple hard to swallow.
Same here, I'm generally a fan of Apple and I voted for Brexit so I'm no EU-lover. But I just can't see how anyone can defend what Apple is doing here, for a company that prides itself on making people's lives better, focussing on customers rather than shareholders (apparently), being a eco-friendly company, doing the "right thing" when it comes to slave labour and child labour in china, taking part in charitable donations & events etc. etc. to then claim it's OK to pay 0.005% tax when every other company has to pay 12%+. Especially considering Apple's vast wealth.
The Irish government as present has not yet appealed - the finance minister stated his intention to but is currently struggling to garner enough support within the government to push it through. Indeed the people of ireland are not looking on this favourably after suffering years of cut-backs and austerity to find the government giving sweetener deals to large multinational companies and possibly REFUSING billions in backdated tax which could pay for schools, housing, hospitals etc. etc.
To an outsider, the United States appear more and more xenophobic with each passing day. If Trump succeeds, I can see USA becoming more like North Korea or to a lesser extent, a mini Russia.
Well.... You seem to be swallowing the ".005%" line, which sounds like a crock of shit. Tim says that in that period they paid $400 million in taxes in that area... unless my math is wrong (it isn't); they would've had to be paying on $8 trillion (that's trillion, with a t) for the .005% to be true. Lol; both figures can't be true. If they can show they payed the $400 million they claim. Your reason for feeling they are doing something wrong is nullified.
Apple does not rely on Irish accounting procedures to avoid paying profits taxes on foreign sales, but to delay paying them until later. The tax code doesn't levy the tax until the foreign earnings actually cross the border. Apple, like other companies, do that because of two widely held views: the tax rate (%) levied by the USA on foreign earnings is currently too high, and tax reform (lower tax rates) are likely in the relatively near future.
Now, Apple computes its what-if tax bill every year, based on the assumption that its foreign earnings were actually remitted back to the USA. Then Apple sets those dollars aside (cash, Treasury bonds, etc.) while waiting for the day when Congress reforms the tax code. That obligation is shown as a liability on Apple's balance sheet, and the Treasury bonds are part of its "cash and equivalents" reported in the press. One day, Apple will remit its foreign earnings from past years, and also pay its tax bill to the IRS -- at the new, post-reform tax rate.
The EU evidently wants to lay hands on that money before the US tax code is reformed. Its actions are based on the erroneous argument that Apple has somehow colluded with Ireland to escape taxation -- as opposed to legally delaying the date of taxation until a more propitious time.
Apple has not evaded its taxes. No individual EU nation is claiming that it did, and the IRS recognizes that Apple is in compliance with US law. Tim Cook is right.
I listened to Tim Cook trying to defend Apple's pitifully low tax rate on the BBC news this morning and it just sounded bad. Very bad PR. Attacking the EU is very unwise. All the people whose businesses pay tax at 20% are looking at this and saying why should Apple pay tax at less than 1%. As a life-long Apple evangelist, even I find this Apple hard to swallow.
Same here, I'm generally a fan of Apple and I voted for Brexit so I'm no EU-lover. But I just can't see how anyone can defend what Apple is doing here, for a company that prides itself on making people's lives better, focussing on customers rather than shareholders (apparently), being a eco-friendly company, doing the "right thing" when it comes to slave labour and child labour in china, taking part in charitable donations & events etc. etc. to then claim it's OK to pay 0.005% tax when every other company has to pay 12%+. Especially considering Apple's vast wealth.
The Irish government as present has not yet appealed - the finance minister stated his intention to but is currently struggling to garner enough support within the government to push it through. Indeed the people of ireland are not looking on this favourably after suffering years of cut-backs and austerity to find the government giving sweetener deals to large multinational companies and possibly REFUSING billions in backdated tax which could pay for schools, housing, hospitals etc. etc.
To an outsider, the United States appear more and more xenophobic with each passing day. If Trump succeeds, I can see USA becoming more like North Korea or to a lesser extent, a mini Russia.
Well.... You seem to be swallowing the ".005%" line, which sounds like a crock of shit. Tim says that in that period they paid $400 million in taxes in that area... unless my math is wrong (it isn't); they would've had to be paying on $8 trillion (that's trillion, with a t) for the .005% to be true. Lol; both figures can't be true. If they can show they payed the $400 million they claim. Your reason for feeling they are doing something wrong is nullified.
I just can't back Cook or Apple on this one, they are in the wrong. Also, if by 'anti-American', Cook means, 'anti-American *corporation*', then I don't think that's necessarily a bad thing. We already have enough co-mingling of corporate and political interests here in the States (and the definition of 'corporate' very much includes Silicon Valley), I've been happy to see the resistance in other countries to efforts on the part of Google etc. at infiltration.
I very much agree with JoeBanks, this smacks more of being petulant than being some kind of ethical crusade.
With you 100%. Apple and Apple fans should stop taking this personally. There needs to be a worldwide clampdown on aggressive tax avoidance for ALL corporations. It's right and fair.
It's fair to do that with laws that apply from now on, rather than retrospective laws that change their purpose and are selectively applied.
Apple does not rely on Irish accounting procedures to avoid paying profits taxes on foreign sales, but to delay paying them until later. The tax code doesn't levy the tax until the foreign earnings actually cross the border. Apple, like other companies, do that because of two widely held views: the tax rate (%) levied by the USA on foreign earnings is currently too high, and tax reform (lower tax rates) are likely in the relatively near future.
Now, Apple computes its what-if tax bill every year, based on the assumption that its foreign earnings were actually remitted back to the USA. Then Apple sets those dollars aside (cash, Treasury bonds, etc.) while waiting for the day when Congress reforms the tax code. That obligation is shown as a liability on Apple's balance sheet, and the Treasury bonds are part of its "cash and equivalents" reported in the press. One day, Apple will remit its foreign earnings from past years, and also pay its tax bill to the IRS -- at the new, post-reform tax rate.
The EU evidently wants to lay hands on that money before the US tax code is reformed. Its actions are based on the erroneous argument that Apple has somehow colluded with Ireland to escape taxation -- as opposed to legally delaying the date of taxation until a more propitious time.
Apple has not evaded its taxes. No individual EU nation is claiming that it did, and the IRS recognizes that Apple is in compliance with US law. Tim Cook is right.
So is it alright if I get my iPhone 7 and hold off paying for it until such time as Apple brings it down to a price that I think is fair?
Pay taxes like anyone else, Tim Cook, and shut up. Glad you're creating jobs, but so is anyone else and they have to pay double digit taxes, not less than 1%.
What an arrogant attitude.
This is probably a good time to repeat myself:
The EU has a VAT - value added tax system, where the taxes are allocated based on where the value to the product was added.
They do not have a sales tax based system.
No value is added in the EU, they are just a consumer. So the taxes should rightfully be applied upstream - either to the US, where the product was designed and developed, or in China where the product was built. (or Ireland where the R&D is performed *cough*).
I think you are mistaken. The intellectual property is added in Ireland, otherwise Apple would be importing finished goods from outside the EU and would then have to pay a 20% import tarrif.
VAT is a tax paid by consumers to the government, it is not paid by the companies so is irrelevant to this discussion.
VAT is however the mechanism by which consumer countries garner tax and corporate taxation is the mechanism by which the producer countries (or IP owning countries) get their taxes. Often less as it happens as VAT is often higher than net margins.
Cook also agreed with comments made by U.S. Secretary of Treasury Jack Lew, who said the tax ruling is a blatant grab at taxes owed to the U.S. government.
"I think that's exactly what it is," Cook said. "I think it's a desire to reallocate taxes that should be paid in the U.S. to the EU."
The above part is complete and utter BS. Yes, Apple and Ireland made agreements on the amount of tax that Apple would have to pay if they'd choose to use Ireland as their Eu-base of operations. But in no way is that tax owed to the US government. Technically it's not owed to anyone since there's an agreement. But even íf there's tax owed to anyone, then Ireland and Apple need to specify what amount of profit/income was made based on EU-sales. Because there's no way that áll of the taxes made in Ireland, are owed to the US government.
Having said that: I despise the EU for charging outrageous taxes like that. Ireland made a deal with Apple to improve Ireland's economy. That was done befóre the EU made a vow to stop tax-deals in the EU. If the EU implements these plans after Ireland's deal with Apple, they need to take it up with Ireland. Apple shouldn't be involved or punished for political turbulence (in the EU in this case).
I despise the EU, even more so because of how they try to punish companies for deals made with countries. But I think Apple is completely missing the point here. Just because you paid 400mil in taxes doesn't mean you're paying a proper amount. 0,005% is still 0,005%, and not the norm for most other companies in Ireland. And the US government certainly doesn't have any right to taxes made by products sold to EU citizens.
I generally agree except for the point you make regarding Ireland making a deal with Apple and the EU changing the rules afterwards. These was a rule in place that said that governments have their own tax authority BUT (Except) that they have to give exactly the same deal to everyone.
You seem not to be aware that 31 years ago Apple was not the huge company it is today. That it was near bankruptcy, and therefore had no significant sway with Ireland or anywhere else. That the tax status put in place at that time and that has endured since certainly was available to any company, as you'll soon see. Amazon and MacDonald's are next in the EU Competition Committee's crosshairs for this same issue, and the list of businesses that apply the same tax structure as Apple in Ireland is long. By definition, that deal was open to all, and taken by many.
Interesting that only US companies are being targeted. We know that some British companies pay little or no taxes using Bermuda, or Jersey etc. All legal in the UK. Not investigated by the EU.
This retrospective law seems arbitrarily applied.
From Bloomberg, some other companies that have had state aid cases against them and have had to cough up:
Apple's income dwarfs that of most companies.
Interesting graph but the European companies were probably real state aid rather than the EU's retrospective tax grab. If the EU is saying that tax avoidance schemes are illegal unless universal then there must by thousands of potential cases. Tens of thousands.
Comments
If you want to have a serious discussion about corporate taxes -- after all, you're the one saying that there should be an "aggressive clampdown on corporate tax avoidance" -- then please at least take the trouble to figure out some basics.
The main reason Apple are in Ireland is so that they are inside the EU where they can add the all-important intellectual property to their goods so that they can claim they originate from within the EU so can be exempted from a 20% import tarif.
There is nothing to stop Apple from importing finished product from their US parent and selling it in the EU - then they would have to pay taxes directly to the US government. They would also have to pay a 20% import Tarif on bringing those finished goods into the EU, though.
"The Company’s (Apple) effective tax rates (some of which is deferred) for all years differ from the statutory federal income tax rate of 35% due primarily to certain undistributed foreign earnings, a substantial portion of which was generated by subsidiaries organized in Ireland, for which no U.S. taxes are provided because such earnings are intended to be indefinitely reinvested outside the U.S."
EDIT: And a more recent one, 2015
Substantially all of the Company’s undistributed international earnings intended to be indefinitely reinvested in operations outside the U.S. were generated by subsidiaries organized in Ireland, which has a statutory tax rate of 12.5%. As of September 26, 2015, U.S. income taxes have not been provided on a cumulative total of $91.5 billion of such earnings. The amount of unrecognized deferred tax liability related to these temporary differences is estimated to be $30.0 billion.
You seem to be swallowing the ".005%" line, which sounds like a crock of shit.
Tim says that in that period they paid $400 million in taxes in that area... unless my math is wrong (it isn't); they would've had to be paying on $8 trillion (that's trillion, with a t) for the .005% to be true.
Lol; both figures can't be true. If they can show they payed the $400 million they claim. Your reason for feeling they are doing something wrong is nullified.
https://www.bloomberg.com/view/articles/2016-09-01/how-apple-calculates-and-pays-its-taxes
Now, Apple computes its what-if tax bill every year, based on the assumption that its foreign earnings were actually remitted back to the USA. Then Apple sets those dollars aside (cash, Treasury bonds, etc.) while waiting for the day when Congress reforms the tax code. That obligation is shown as a liability on Apple's balance sheet, and the Treasury bonds are part of its "cash and equivalents" reported in the press. One day, Apple will remit its foreign earnings from past years, and also pay its tax bill to the IRS -- at the new, post-reform tax rate.
The EU evidently wants to lay hands on that money before the US tax code is reformed. Its actions are based on the erroneous argument that Apple has somehow colluded with Ireland to escape taxation -- as opposed to legally delaying the date of taxation until a more propitious time.
Apple has not evaded its taxes. No individual EU nation is claiming that it did, and the IRS recognizes that Apple is in compliance with US law. Tim Cook is right.
So is it alright if I get my iPhone 7 and hold off paying for it until such time as Apple brings it down to a price that I think is fair?
VAT is however the mechanism by which consumer countries garner tax and corporate taxation is the mechanism by which the producer countries (or IP owning countries) get their taxes. Often less as it happens as VAT is often higher than net margins.