A US Senate committee has accused Apple of employing a “highly questionable” network of offshore entities to avoid paying billions in US income taxes.
The committee said that the tech giant’s complex arrangements includes three subsidiaries, based ostensibly in Ireland, which appear not to be designated as tax resident anywhere. According to reports, one committee member dubbed them “iCompanies – I for imaginary, invisible”.
Investigations into Apple’s network found that the group considers three key subsidiaries based in Ireland to have no tax jurisdiction at all. One of the trio, Apple Sales International (ASI), reported revenues of US$74bn over four years but paid minimal tax. In 2011 ASI had pre-tax earnings of US$22bn but paid only US$10m in tax.
“Apple wasn’t satisfied with shifting its profits to a low-tax offshore tax haven,” commented senator Carl Levin, the subcommittee’s Democratic chairman. “Apple sought the Holy Grail of tax avoidance. It has created offshore entities holding tens of billions of dollars, while claiming to be tax resident nowhere.
“We intend to highlight that gimmick and other Apple offshore tax avoidance tactics so that American working families who pay their share of taxes understand how offshore tax loopholes raise their tax burden, add to the federal deficit and ought to be closed.”
Senator John McCain, the subcommittee’s Republican member, added that Apple’s “creation of companies that don’t exist anywhere for tax purposes” was “the epitome of tax creativity”.
Apple’s chief executive officer (CEO), Tim Cook, is due to respond to the charges at a hearing convened by the bipartisan permanent subcommittee on investigation in Washington, but has strongly denied the charges ahead of the meeting.
In a statement issued by the group, Cook denied charges that the company employs tax gimmicks and stressed that Apple has created 600,000 jobs in the US and paid US$6bn in taxes to the US Treasury in 2012, when it was responsible for US$1 of every US$40 of US corporate income tax paid. Cook also defended the group’s Irish subsidiaries, which he said employ more than 4,000 people.
“Apple complies fully with both the laws and spirit of the laws. And Apple pays all its required taxes, both in this country and abroad,” the statement read.
“Apple welcomes an objective examination of the US corporate tax system, which has not kept pace with the advent of the digital age and the rapidly changing global economy. The company supports comprehensive tax reform as a necessary step to promote growth and enable American multinational companies to remain competitive with their foreign counterparts in both domestic and international markets,” Cook said.
He described Apple’s relationship with the Irish subsidiaries as cost-sharing agreements and said the subsidiaries shared both risks and rewards. He said the arrangement was regularly audited by the US Internal Revenue Service (IRS).
The US money market fund reforms came into effect in 2016 and are already dramatically shaping US fund industry with investors flooding out of prime funds and into government securities. While the reforms are similar, they are not the same. GTNews interviews Yeng Bulter, global head of the cash business at State Street Global Advisors on the differences.
The top five sectors Asian fintech investors are interested in are data analytics, blockchain, lending, payments and regtech, according to Gary Hwa, EY regional managing partner.
On the third day of the Singapore Fintech Festival conference, there was a focus on specific applications of fintech innovation. One was trade finance, which is clearly is ripe for a revolution.
Kicking off day two of the Singapore Fintech Festival, Deloitte Chairman David Cruikshank said that fintech is significant for three reasons. First, customer expectations of services are higher than ever. Second, barriers to entry are lower than before. And finally, financial institutions (FIs) face a threat of what a competitor might do.