Apple forks over another $184M to UK tax authorities after 'extensive audit'
The world's most valuable company now has a bit less in the bank after Apple was forced to settle up with Her Majesty's Revenue and Customs to the tune of $184 million in additional taxes.
HMRC extracted the extra payment from Apple Europe after what the department called an "extensive audit" of the company's pre-2015 tax filings, according to the Financial Times. Apple Europe is a London-based subsidiary of Apple which, among other activities, handles European marketing operations.
The audit is believed to have found that Apple Europe was not paid fair value for the services it provided to other Apple subsidiaries, leading to artificially lower taxable revenue.
"We know the important role that tax payments play in society. Apple pays all that we owe according to tax laws and local customs in the countries where we operate," Apple said in response.
"As a multinational business and the largest taxpayer in the world, Apple is regularly audited by tax authorities around the world. HMRC recently concluded a multiyear audit of our UK accounts and the settlement we reached with HMRC is reflected in our recently filed accounts."
Apple has been among a number of other large multinationals put under the microscope in recent years over international tax arrangements. Various governments around the world - most notably in Europe - have wrested billions of dollars in extra payments from the company, including a record $15.4 billion settlement in Ireland that Apple will begin paying this year.
HMRC extracted the extra payment from Apple Europe after what the department called an "extensive audit" of the company's pre-2015 tax filings, according to the Financial Times. Apple Europe is a London-based subsidiary of Apple which, among other activities, handles European marketing operations.
The audit is believed to have found that Apple Europe was not paid fair value for the services it provided to other Apple subsidiaries, leading to artificially lower taxable revenue.
"We know the important role that tax payments play in society. Apple pays all that we owe according to tax laws and local customs in the countries where we operate," Apple said in response.
"As a multinational business and the largest taxpayer in the world, Apple is regularly audited by tax authorities around the world. HMRC recently concluded a multiyear audit of our UK accounts and the settlement we reached with HMRC is reflected in our recently filed accounts."
Apple has been among a number of other large multinationals put under the microscope in recent years over international tax arrangements. Various governments around the world - most notably in Europe - have wrested billions of dollars in extra payments from the company, including a record $15.4 billion settlement in Ireland that Apple will begin paying this year.
Comments
There's nothing to read here. Just click-bait as the headline is implying that there's something shady going on which there isn't.
Note that there was no fine or accusation of wrongdoing. All that happened here is that Apple’s accountant’s interpretation of a fair amount was different than HMRCs. This is very common when you’re dealing with internal charging structures and with depreciation of assets. This is especially annoying because Apple kit is lumped into the same category as PC kit, even though a Mac doesn’t lose its value anywhere near as fast.
This won’t have been the first time this has happened.
It’s not worth the effort or bad publicity for what is essentially loose change.
It’s a differing opinion, and Apple’s accountants will still think they’re right.
Oh, and Apple’s claim that they pay every cent owed has just been proved. They found they owed more, and they coughed up. They didn’t drag our impoverished government through court, which they’re entitled to do.
While I was there they even implemented the rule of sending all cheques over 1 million pounds directly to the bank of England by courier to avoid paying them into local accounts and losing interest on those amounts while the cheques cleared.
Of course, times have changed and attitudes might be different now. It's not even called the Inland Revenue now.
How on earth can I be paying more if a government taxes the profits, a company makes in some country? Apple will not change its investments or product strategy because it has to pay taxes on the profits it makes.
Taxes on profits are calculated on the total profit figures a company makes and are charged typically charged more than 1 year after the sale of a product. Apple, as any other company cannot come to me one year after I bought my Mac saying: hey you have to pay another 3% because we received a tax bill.
Nor can Apple anticipate the tax by an increase of selling price, because the profit is calculated on the total of all products, acquisition, financial earnings, .... One can calculate the margin on individual items like a iPhone, an Mac or an Apple Music subscription, but one cannot calculated the profit of individual items; the revenue of other items influence the profit positively or negatively. One can assume that the margin on Apple Music subscriptions is lower than on iPhones, so it impacts negatively the average profit percentage of Apple. If Apple buys a company, it is a deductible expense for the taxes on profits, and Apple does not know 1 year upfront the conditions of a potential acquisition.
Besides there is a market that plays; Apple cannot increase its prices without impacting the market.