Thursday, 14 December, 2017

Paradise Papers | Offshore leaks depict Apple's quiet shift to Island of Jersey

Apple CEO Tim Cook Testifies At Senate Hearing On U.S. Tax Code Apple CEO Tim Cook in May 2013 testified before Congress about his company's tax practices. Getty Images
Kenny Thornton | 10 November, 2017, 02:02

Few companies have been seen as aggressive - and successful - in pushing down corporate taxes as Apple, making it a target of government investigations in the USA and Europe.

Apple CEO Tim Cook was forced to defend Apple's tax practices in testimony to the U.S. Senate in 2013.

That's the story this week from a number of key documents uncovered amid an European Union investigation into Apple's alleged tax evasion practices. Apple responded by moving its money somewhere a bit sunnier.

Jersey is commonly used by corporations as a tax haven as it doesn't usually charge any tax on corporate income.

The result is that more than $100 billion in corporate tax revenue is lost annually by the USA government, according to analysts' estimates.

Since 2013, Apple has come under heavy criticism for minimizing its tax bill by shifting profits from sales in Europe, Asia, and the Middle East out of any country's direct tax jurisdiction, a tax strategy it has been employing since the 1980s. "In fact, our payments to Ireland increased significantly and over the past three years we've paid $1.5bn in tax there - 7% of all corporate income taxes paid in that country", said an Apple statement. US corporations have for years complained that the 35 percent rate, the highest among economically advanced countries, puts them at a competitive disadvantage.

Vestager said her request preceded reports based on the "Paradise Papers" which showed that Apple shifted key parts of its business to Jersey as an offshore tax haven in a move to maintain a low tax rate. "We don't depend on tax gimmicks", he said. Apple decided that its new offshore tax structure should use Appleby's office in Jersey, which is one of the Channel Islands and has strong links to the British banking system.

US Gasoline Inventories Hit 3-Year Low
US crude oil imports averaged about 7.4 million barrels per day last week, down by 194,000 barrels per day from the previous week. At 125.6 million barrels, nationwide distillate inventories were at their lowest since February, 2014.

These companies weren't really paying taxes, since they didn't have a residency anywhere in the world that required them to do so. It said it pays an effective tax rate of 21 percent on foreign earnings.

ASI had made more than $120bn (£91.52bn) - almost 60% of Apple's earnings worldwide - and had become their biggest profit generator, and most of the profits had been transferred to AOI as dividends.

Apple said Monday that the move was created to "preserve its tax payments to the United States". "With a 20% [corporate tax] rate, I suppose that decreases the incentive to stash money overseas". In the new tax plan proposed by US President Donald Trump, companies would only pay 12 percent on overseas profit. "Apple's subsidiary, which holds overseas cash, became resident in the UK Crown dependency of Jersey, specifically to ensure tax obligations and payments to the U.S. were not reduced", Apple said.

Last year, the Obama administration sought to crack down on companies moving headquarters overseas, so-called corporate inversions, to avoid paying USA taxes.

Apple has confirmed all of its global sales outside of the United States are recorded in Ireland.

This week, investigative journalists released details of the Paradise Papers data leak, in which 13.4 million documents revealed the offshore financial dealings of wealthy individuals and multinational companies.

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