Friday 18 October 2019

Apple pays tax rate of less than 2pc in Ireland

Apple CEO Tim Cook. Photo: Reuters
Apple CEO Tim Cook. Photo: Reuters

Ailish O’Hora

THE multi-billion computer giant Apple negotiated a tax rate of under 2pc with the Irish government in the 1980s and moved most of its profits to “ghost companies” here, a US congressional panel heard today.

The committee heard that Apple moved tens of billions of dollars in income through Irish subsidiaries to avoid paying tax.

As the hearing unfolded, Ireland’s tax regime was highlighted again– it has been described as a “haven” for many multinationals.

“Apple has quietly negotiated with the Irish Government an income tax rate of less than 2pc, well under the Irish statutory rate of 12pc as well as the tax rates of other European countries and the United States,” Senator Carl Levin, a Democrat from Michigan told the  subcommittee’s chairman.

“And as we’ve seen, in practice Apple is able to pay a rate far below even that low figure.”

In a 40-page memorandum released ahead of the appearance by Apple Chief Executive Tim Cook before Congress today, a Senate subcommittee identified three subsidiaries that have no tax residency either in Ireland, where they are incorporated, or in the United States, where those companies are managed.

The main subsidiary, a holding company that includes Apple's retail stores throughout Europe, has not paid any corporate income tax in the last five years, the report said.

Apple's arrangement has allowed it to pay just 1.9pc tax on its $37bn in overseas profits in 2012, despite the fact that the average tax rate in the countries of the Organisation for Economic Co-operation and Development (OECD), its main markets, was 24 percent in 2012.

The report said "Ireland has essentially functioned as a tax haven for Apple".

Earlier the govenment said it was not responsible for Apple low tax rates.

Apple said in a comment posted online on Monday it did not use "tax gimmicks". It said the existence of its subsidiary Apple Operations International in Ireland did not reduce Apple's U.S. tax liability, and the company would pay more than $7bn in U.S. taxes in fiscal 2013.

A number of U.S. multinationals including web search leader Google, online retailer and coffee chain Starbucks have come under criticism for arranging their affairs in a way that leaves them liable to low rates of tax on billions of dollars of overseas sales.

According to the congressional report, Ireland had also agreed a special 2pc rate for Apple's Irish taxable profits instead of the normal 12.5pc.


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