Ireland Considers Closing Loophole Used By Apple To Avoid Higher Taxes | Cult of Mac

Ireland Considers Closing Loophole Used By Apple To Avoid Higher Taxes



Apple believes it’s the highest taxpayer in the U.S, but the company has still been subjected to intense scrutiny because the majority of its cash isn’t located stateside, but in offshore subsidiaries scattered around the globe.

In a U.S. Senate Permanent Subcommittee this summer, Apple was accused of using Irish tax loopholes to avoid paying on about $44 billion in foreign profits. By basing ghost subsidiaries in Ireland, Apple has been able to not pay a considerable amount of taxes to any country. Now the Irish government is considering changing its tax code to prevent such behavior from happening in the future.

Ireland’s Finance Bill “used to allow companies to be ‘stateless’ in terms of their place of tax residence,” reports TheStreet. Apple currently has multiple subsidiaries, like “Apple Operations International,” located in Cork that pay less than 2% in taxes, which is lower than the Irish 12.5% corporate tax and much lower than the U.S. corporate income tax—a rate which also happens to be the highest in the world.

If what the Irish government is proposing comes to pass in the next couple of years, the loophole will be closed and Apple will be forced to declare a country of residency.

Storing billions offshore to avoid higher taxes, which is common practice for many U.S-based companies, is what Senator Carl Levin called the “Holy Grail of tax avoidance” a couple months ago in the U.S. government’s investigation of Apple and other big tech companies.

Despite heavy criticism, Apple has held its ground and said that it not only complies with the letter of the law, but “the spirit of the law.” The SEC recently closed its investigation on Apple’s 2012 tax disclosures after finding no illegal activity.

There are plenty of other zero-tax jurisdictions in the world Apple can still move to if Ireland changes its policy. If Apple sets up shop in Bermuda soon, now we’ll know why.

Source: TheStreet