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.
You were the one using the word "investigation", saying: "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...
Now after being advised you were mistaken, the EU didn't know to have a look until Apple was investigated in the US and Ireland was implicated in the avoidance structure, you've decided that "charged" is the new word and you didn't really mean investigated? OK then.
Japan is the only country to have used charges of tax evasion against Apple AFAIK, and those charges got settled with Apple agreeing to payment. Italy got a court judgement against Apple for supposed tax fraud (FWIW I think Apple was questionably OK there but a court disagrees) and was threatening an Apple exec with jail-time for non-compliance but they came to an agreement shortly after and that got settled too.
So in the EU specifically I already said what Apple does tax-wise has largely been legal (whether it should be is a different matter) outside of what happened in Italy, and repeated it a couple more times in case someone missed it. Apparently you were one missing it anyway?
...But as @asdasd ; mentions this article is not about any company's overall tax strategy anyway but instead the new digital economy and delivery of services. For the moment those revenues are largely un-taxable and unaccounted for in the countries where the services are delivered and paid. The decades old tax laws did not anticipate it. France is not the first and absolutely will not be the last to craft some approach to how digital revenues and/or profits (income) should be handled regarding taxes.
As I said earlier in the thread these big US techs had better be working in close partnership and espousing the same points, offering suggestions and otherwise lobbying for international rather than per country laws.
The new tax rules are coming despite any saber-rattling from the US. The best the companies most affected can do is cooperate as one body with those organizations trying to form international agreement on how those revenues should be taxed because they most assuredly WILL be taxed.
Japan and Italy cases are similar. In Italy that was an accounting error (or misbehavior if you want) that was settled for €45.000. In Japan the tax authority notified Apple for their ignoring a tax to withhold over royalties paid to foreign licensors. Apple has complied. Such things happen in every business. Both Japan and Italy cases are anecdotal and local. We don’t know whether Apple has resisted to the point of being sentenced by a court in those countries. Those cannot be used as arguments to feed a fictitious global tax evasion scheme theory. Such theories belong to political domain and I’m not into that.
In Irish case there is no tax evasion since illegal state aid and tax evasion are mutually exclusive. If this is state aid there is no tax evasion and if this is tax evasion there is no state aid or whatsoever. This is why the Irish investigation focused primarily on Irish tax practices. European Commission belongs to the executive branch, it is not a court. It is Apple who ported the case to the court along with Irish government, not the Commission.
Japan and Italy cases are similar. In Italy that was an accounting error (or misbehavior if you want) that was settled for €45.000. In Japan the tax authority notified Apple for their ignoring a tax to withhold over royalties paid to foreign licensors. Apple has complied. Such things happen in every business. Both Japan and Italy cases are anecdotal and local. We don’t know whether Apple has resisted to the point of being sentenced by a court in those countries. Those cannot be used as arguments to feed a fictitious global tax evasion scheme theory. Such theories belong to political domain and I’m not into that.
In Irish case there is no tax evasion since illegal state aid and tax evasion are mutually exclusive. If this is state aid there is no tax evasion and if this is tax evasion there is no state aid or whatsoever. This is why the Irish investigation focused primarily on Irish tax practices. European Commission belongs to the executive branch, it is not a court. It is Apple who ported the case to the court along with Irish government, not the Commission.
Ah a much better post!
I actually agree with this one. Both Japan and Italy were outliers regarding Apple and taxes.
In other jurisdictions they may be toeing the legal line but still manage to avoid outright tax evasion. That's OK too altho some companies aren't willing to get so close as to chance falling on the wrong side of the law. They moderate their risk by leaving a little tax wiggle room. With $Billions to be banked it's not at all surprising that these big US techs are willing to accept the risks for walking on a thin line. They can afford to lose a few as long as they win most of 'em.
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.
Apple France is (once again) the retail division. Apple would have no reason to incorporate in France if it didn’t have a retail division.
Japan and Italy cases are similar. In Italy that was an accounting error (or misbehavior if you want) that was settled for €45.000. In Japan the tax authority notified Apple for their ignoring a tax to withhold over royalties paid to foreign licensors. Apple has complied. Such things happen in every business. Both Japan and Italy cases are anecdotal and local. We don’t know whether Apple has resisted to the point of being sentenced by a court in those countries. Those cannot be used as arguments to feed a fictitious global tax evasion scheme theory. Such theories belong to political domain and I’m not into that.
In Irish case there is no tax evasion since illegal state aid and tax evasion are mutually exclusive. If this is state aid there is no tax evasion and if this is tax evasion there is no state aid or whatsoever. This is why the Irish investigation focused primarily on Irish tax practices. European Commission belongs to the executive branch, it is not a court. It is Apple who ported the case to the court along with Irish government, not the Commission.
Ah a much better post!
I actually agree with this one. Both Japan and Italy were outliers regarding Apple and taxes.
In other jurisdictions they may be toeing the legal line but still manage to avoid outright tax evasion. That's OK too altho some companies aren't willing to get so close as to chance falling on the wrong side of the law. They moderate their risk by leaving a little tax wiggle room. With $Billions to be banked it's not at all surprising that these big US techs are willing to accept the risks for walking on a thin line. They can afford to lose a few as long as they win most of 'em.
I thought there was a big fine from France a few years ago. Can't remember the details though.
Japan and Italy cases are similar. In Italy that was an accounting error (or misbehavior if you want) that was settled for €45.000. In Japan the tax authority notified Apple for their ignoring a tax to withhold over royalties paid to foreign licensors. Apple has complied. Such things happen in every business. Both Japan and Italy cases are anecdotal and local. We don’t know whether Apple has resisted to the point of being sentenced by a court in those countries. Those cannot be used as arguments to feed a fictitious global tax evasion scheme theory. Such theories belong to political domain and I’m not into that.
In Irish case there is no tax evasion since illegal state aid and tax evasion are mutually exclusive. If this is state aid there is no tax evasion and if this is tax evasion there is no state aid or whatsoever. This is why the Irish investigation focused primarily on Irish tax practices. European Commission belongs to the executive branch, it is not a court. It is Apple who ported the case to the court along with Irish government, not the Commission.
Ah a much better post!
I actually agree with this one. Both Japan and Italy were outliers regarding Apple and taxes.
In other jurisdictions they may be toeing the legal line but still manage to avoid outright tax evasion. That's OK too altho some companies aren't willing to get so close as to chance falling on the wrong side of the law. They moderate their risk by leaving a little tax wiggle room. With $Billions to be banked it's not at all surprising that these big US techs are willing to accept the risks for walking on a thin line. They can afford to lose a few as long as they win most of 'em.
I thought there was a big fine from France a few years ago. Can't remember the details though.
Yes there was, $1.27bn worth of "fine".
France claimed Google owed several years of corporate taxes for services rendered in that country over a period of several years. Google disagreed and fought it. After a very lengthy trial and appeals process French courts surprisingly sided with Google and dismissed the tax claims.
So the EU is ok with countries writing tax laws to raise taxes on certain companies but prohibits counties from lowering taxes (see Ireland)?
You hit the nail on the head...
From the CNBC article: “France is sovereign, and France decides its own tax rules. And this will continue to be the case,” France’s Finance Minister Bruno Le Maire said in a statement.
So France, along with Germany, the two main culprits trying to cobble together a European superstate, but now France decides it is "sovereign" when it comes to raising taxes??
You can't make this hypocrisy up.
(I wonder what Britain thinks of France's newfound appreciation for sovereignty...)
EU states have always taken a national approach to taxes. I want UK to do this too, I don't see why Apple should sell millions in the UK and pay naff all tax by switching it to Ireland via a licensing agreement. Works in my book and will be the way taxes are levied in future and its all because smart companies did smart thing with licensing,
Now today Google announces that they "agreed" (LOL) to pay a bit over $1B in combined taxes and penalties for what could be called tax evasion. Seems France did not like that Google transferred revenues that came from French citizens' and companies to realize those profits in Ireland instead where only a negligible tax was paid. Amazon, Facebook and Apple are also reportedly in line for similar French tax claims.
In the case of Apple they had already agreed to a very similar tax evasion claim from Italy a couple of years ago, so there is precedence that moving tax obligations from the EU country where sales occurred to another EU country may be illegal.
Comments
"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...
Now after being advised you were mistaken, the EU didn't know to have a look until Apple was investigated in the US and Ireland was implicated in the avoidance structure, you've decided that "charged" is the new word and you didn't really mean investigated? OK then.
Japan is the only country to have used charges of tax evasion against Apple AFAIK, and those charges got settled with Apple agreeing to payment.
Italy got a court judgement against Apple for supposed tax fraud (FWIW I think Apple was questionably OK there but a court disagrees) and was threatening an Apple exec with jail-time for non-compliance but they came to an agreement shortly after and that got settled too.
So in the EU specifically I already said what Apple does tax-wise has largely been legal (whether it should be is a different matter) outside of what happened in Italy, and repeated it a couple more times in case someone missed it. Apparently you were one missing it anyway?
...But as @asdasd ; mentions this article is not about any company's overall tax strategy anyway but instead the new digital economy and delivery of services. For the moment those revenues are largely un-taxable and unaccounted for in the countries where the services are delivered and paid. The decades old tax laws did not anticipate it. France is not the first and absolutely will not be the last to craft some approach to how digital revenues and/or profits (income) should be handled regarding taxes.
As I said earlier in the thread these big US techs had better be working in close partnership and espousing the same points, offering suggestions and otherwise lobbying for international rather than per country laws.
The new tax rules are coming despite any saber-rattling from the US. The best the companies most affected can do is cooperate as one body with those organizations trying to form international agreement on how those revenues should be taxed because they most assuredly WILL be taxed.
In Irish case there is no tax evasion since illegal state aid and tax evasion are mutually exclusive. If this is state aid there is no tax evasion and if this is tax evasion there is no state aid or whatsoever. This is why the Irish investigation focused primarily on Irish tax practices. European Commission belongs to the executive branch, it is not a court. It is Apple who ported the case to the court along with Irish government, not the Commission.
I actually agree with this one. Both Japan and Italy were outliers regarding Apple and taxes.
In other jurisdictions they may be toeing the legal line but still manage to avoid outright tax evasion. That's OK too altho some companies aren't willing to get so close as to chance falling on the wrong side of the law. They moderate their risk by leaving a little tax wiggle room. With $Billions to be banked it's not at all surprising that these big US techs are willing to accept the risks for walking on a thin line. They can afford to lose a few as long as they win most of 'em.
France claimed Google owed several years of corporate taxes for services rendered in that country over a period of several years. Google disagreed and fought it. After a very lengthy trial and appeals process French courts surprisingly sided with Google and dismissed the tax claims.
In the case of Apple they had already agreed to a very similar tax evasion claim from Italy a couple of years ago, so there is precedence that moving tax obligations from the EU country where sales occurred to another EU country may be illegal.