Apple faces €1bn Italian tax probe
APPLE issued a strenuous denial yesterday following allegations that it booked some profits through its Irish subsidiary to avoid paying tax in Italy. The technology giant is under investigation in Italy for allegedly hiding €1bn from local tax authorities.
Milan prosecutors accuse the company of failing to declare €206m in 2010 and €853m in 2011 by booking profits through Irish subsidiary Apple Sales International, which pays lower corporation tax.
"Apple pays every dollar and euro it owes in taxes and we are continuously audited by governments around the world," an Apple spokesperson told the Irish Independent.
"The Italian tax authorities already audited Apple Italy in 2007, 2008 and 2009 and confirmed that we were in full compliance with the OECD documentation and transparency requirements. We are confident the current review will reach the same conclusion."
The development is the latest in a series of scandals that have erupted around several multinational technology companies and the low taxes they pay in Ireland.
A US Senate investigation in May revealed that Apple has structured its operations so that the vast majority of its non-US profits are reported in Ireland, by companies which are not actually tax resident in this country.
Irish subsidiary Apple Sales International deals mainly with Chinese companies on the manufacture of iPads and iPhones, the Senate report found. It then sells these products to another Irish company which resells them to retail subsidiaries in Italy and other European countries. The pricing of these transactions ensures that the lion's share of profits end up with ASI. This works in part because Irish laws allow companies to registered in Ireland – but be stateless for tax purposes.
Last month Finance Minister Michael Noonan promised to destroy this loophole.
"Let me be crystal clear. Ireland wants to be part of the solution to this global tax challenge, not part of the problem," he said, introducing the latest Budget.
The new rules will apply from January 2015.
The issue first came under the microscope earlier this year when US Senator Carl Levin branded Ireland a "tax haven".
The EU then launched a probe into multinational operations in Ireland, the Netherlands and Luxembourg to ascertain if the countries provided any 'sweetheart' deals to international corporations.