An Irish parliamentary committee has dismissed the opportunity to grill Apple and Google over their tax affairs in Ireland, despite requests for a change to the way in which it taxes large multinationals that do business in its country.
The move comes weeks after Apple and Google came under scrutiny for the way in which they use tax “loopholes” or “gimmicks” to avoid paying excessive taxes on international sales. It was revealed that Apple used an Irish subsidiary with zero employees to pay less than 0.05% tax on $78 billion over four years.
Apple has received a lot of heat from the U.S. Senate lately regarding its international tax practices and off-shore cash, and you can now add Apple co-founder Steve Wozniak to the list of Apple tax dissenters.
Woz said that he doesn’t think Apple’s tax practices are really fair, and suggested that Apple, and other large firms, be taxed on their income.
In an interview with the BBC, Woz had the following to say regarding Apple’s tax practices:
We’ve already brought you some of the most interesting topics that came up during Tim Cook’s interview at D11 last night, but if you’d like to watch the entire thing yourself, you can do so right now. AllThingsD has posted the entire thing — which runs for one hour and 20 minutes — online this morning, and you can watch it below.
Tim Cook survived his grilling during his appearance before the U.S. Senate Sub-Committee Hearing to Examine Offshore Profit Shifting and Tax Avoidance by Apple Inc. Even though some of the senators still aren’t happy with Apple’s international tax practices, a solution to the problem wasn’t given.
Not one to pass up the opportunity to make fun of senators, John Stewart broke down the Senate hearing on his show last night and jokingly proposed the U.S. create the ‘Tax Code Nano.’ The entire bit is pretty hilarious, you can watch it below:
Apple CEO Tim Cook and CFO Peter Oppenheimer are in Washington D.C. this morning to talk to a Senate subcommittee about Apple’s off-shore cash hoard. The Apple execs are expected to face a lot of heat surrounding Apple’s Irish subsidiary, through which Apple has funneled 64% of its earnings without paying any tax, yet has zero employees.
Before the hearing got underway though, Ireland’s deputy prime minister, Eamon Gilmore, issued a public statement which claimed Ireland isn’t to blame for Apple’s low tax bill, even though the country has become a tax haven for multinationals since the 1960s.
Apple CEO Tim Cook is scheduled to appear before a Senate committee tomorrow morning to talk about Apple’s off-shore cash that’s now worth over $100 billion. Last week, Cook stated that his company believes the entire U.S. corporate tax system needs to be overhauled to encourage companies like Apple to bring earnings from overseas back to the U.S.
This afternoon Apple published its testimony before the Permanent Subcommittee on Investigations, that contained a wish-list for the type of comprehensive corporate tax reform it thinks would be best for the U.S. tax system. Following the company’s ethos to believe in the simple, not the complex, Apple’s tax-wish list would dramatically simplify the U.S. corporate tax system.
In its testimony, Apple states that the comprehensive reform should have the following traits:
Apple just sidestepped a $9.2 billion tax bill by financing part of a $55 billion stock buyback with debt rather than using its offshore cash. The sneaky trick means the U.S. government is unable to bill the Cupertino company for tax on the deal, which is said to be the “the biggest corporate offering on record,” according to Bloomberg.
During the fiscal year of 2012, Apple made more money than ever before and became the world’s most valuable company. But they also managed to pay only 1.9% of income tax on earnings outside of the U.S. Of the $36.8 billion Apple earned outside the U.S. Apple only paid $713 million in taxes.
Some may see those numbers and cry foul, but Apple hasn’t done anything illegal. Like a lot of other Fortune 500 companies, Apple keeps their international profits stashed somewhere outside the U.S. rather than having to pay a heavy tax rate for bring that cash back to America. The strategy saves Apple billions on their tax bill, but it also limits what they can do with those profits.
Apple's taxes due and tax rate for 2011 don't match reported numbers
Earlier in this day, we reported on a New York Times piece in which the paper claimed that Apple was using a variety of measure to avoid paying U.S. income tax. It turns out that the Times based key pieces of its information on a study that had been discredited two weeks prior.
The data used by the Times included a report by the Greenlining Institute, which made errors in computing Apple’s supposed tax rate at 9.8% for the 2011. The data used by the report effectively compared Apple’s 2011 profit with taxes paid by the company for profits in 2010 and drew unfounded conclusions as a result.
Apple fails when it comes to defending its tax practices
Over the weekend, the New York Times ran another in its series of exposes about Apple. This one focused on Apple’s complex mix of offices and subsidiaries located throughout the world and the U.S. that allow the company to keep large portions of its more than $100 billion in low-tax states and countries.
The report comes after the paper’s expose on working conditions within Foxconn, the contractor that Apple uses to assemble most of its products and calls by politicians and members of the media for Apple to move more of its manufacturing and money to American soil.