Apple's tax avoidance plan laid bare

SAN FRANCISCO • Apple shifted much of its offshore wealth from Ireland to a tax haven in the British Isles, according to a review of leaked Paradise Papers documents.

Apple confirmed the move in an online post, saying it served to "ensure that tax obligations and payments to the US were not reduced".

After the US technology colossus stated publicly in 2013 that it was paying its proper share of taxes, it moved the bulk of its untaxed overseas cash to Jersey, a British dependency in the Channel Islands, various media organisations reported on Monday based on the cache of documents known as the Paradise Papers.

The once-secret documents shared with some media outlets by the US-based International Consortium of Investigative Journalists has exposed tactics the wealthy and powerful have used to avoid taxes.

In its lengthy post, Apple said it moved profits to Jersey while making corporate changes to adapt to Irish tax laws tightening in 2015. Since then, all its Irish operations have been conducted through Irish resident companies, paying a statutory 12.5 per cent tax, according to the California-based technology titan.

"Since then, Apple has paid billions of dollars in US tax on the investment income of this subsidiary," Apple said.

"There was no tax benefit for Apple from this change and, importantly, this did not reduce Apple's tax payments or tax liability in any country."

Apple's response did not specifically address what taxes, if any, were paid on the original profits channelled to Jersey.

It insisted it is the world's biggest taxpayer, paying more than US$35 billion (S$47.8 billion) in corporate income taxes during the past three years, plus billions more in taxes on property, payrolls, sales and value-added tax.

"The debate over Apple's taxes is not about how much we owe but where we owe it," Apple said. "Under the current international tax system, profits are taxed based on where the value is created."

Apple said that its effective global tax rate is 24.6 per cent.

AGENCE FRANCE-PRESSE

A version of this article appeared in the print edition of The Straits Times on November 08, 2017, with the headline 'Apple's tax avoidance plan laid bare'. Print Edition | Subscribe