Apple accused of using tax avoidance tactics

23 May 2013

Apple allegedly “quietly negotiated” an income tax with Ireland of less than 2% in order to avoid paying US tax, a recent congressional hearing revealed.

The tax regime in Ireland is known as a “Tax Haven” for US companies to minimise their US taxes. An investigation by the Senate claims that this multinational company shifted tens of billions of dollars through “ghost companies” in Ireland to avoid paying these US taxes.  

A hearing was held to see how these large corporations use loop holes to move offshore tax payments and avoid paying taxes in the US. Apple Operations International (AOI), Apple’s Irish subsidiary, which was incorporated in 1980, was the “apex” of the company’s tax avoidance strategy. Apple Sales International, another Apple subsidiary, received $36 billion income just last year alone, in a nation where it has paid almost no income tax and no US taxes.

Apple’s claim that its two Irish companies owe no US taxes is “a sham,” said Senator Levin. The panel explained how Apple’s Irish-registered companies had no physical address and has never had any employees in its 30 years of existence. All of the accounting records are held in Texas and the assets are held in a New York bank account. The board for the Irish companies consists of two Apple employees and an Irish employee of Apple Distribution International, an Irish company that AOI owns. Senator Levin explains that for six years, and out of the 33 board meetings that took place, the Irish resident-director only took part in 6 of them.

The subcommittee said that Apple has been using “transfer pricing” by moving profits away from the US into a low tax country, which in this case is Ireland.

The Irish Government has disagreed with claims that it negotiated a special corporate tax rate with Apple.