Irish Examiner got an inside look at Apple’s EU headquarters in Cork along with some interviews with employees there. The campus holds around 4,000 Apple employees that the report points out span across support services, distribution, mapping and manufacturing. Read more
Following its announcement of record Q2 earnings, Apple published its quarterly 10-Q report, providing more in-depth details about finances. Notably, the company warns of the possibility of “material” back taxes due to the company’s well-documented favorable tax arrangements with Ireland.
On June 11, 2014, the European Commission issued an opening decision initiating a formal investigation against Ireland for alleged state aid to the Company. The opening decision concerns the allocation of profits for taxation purposes of the Irish branches of two subsidiaries of the Company. The Company believes the European Commission’s assertions are without merit. If the European Commission were to conclude against Ireland, the European Commission could require Ireland to recover from the Company past taxes covering a period of up to 10 years reflective of the disallowed state aid. While such amount could be material, as of March 28, 2015 the Company is unable to estimate the impact.
Apple will need to pay the fines if the European Commission, which is akin to the U.S.’s SEC, rules that Ireland granted Apple special privileges for reduced taxes. As the European Commission has not made any formal rulings on the fine, Apple says it could not estimate the impact. However, the Financial Times pegs the potential payments at $2.5 billion based on Apple’s current rate of profits.
Apple has sent an email to developers informing them of upcoming changes to app pricing in Canada, the European Union, Norway, Iceland, and Russia. These changes, which take effect later this week, are not the same as the recent change to country-specific VAT rates, and impact a wider range of markets.
The pricing updates are being implemented to accommodate changing tax and currency exchange rates. Prices will go up for customers in all of the affected countries except Iceland, which will see a decrease. Russia’s prices will “change,” according to the email, but there aren’t any additional details on what that may mean.
If Congress delivers on a proposed tax holiday, Apple could soon join a slew of American companies with large dollar amounts of offshore money eager to repatriate their earnings without being subject to the current corporate tax rate. News of the tax holiday being discussed comes via a report from Reuters:
Top Senate Democrats and Republicans on Tuesday said they were considering offering American companies a one-time tax break if they repatriate profits stashed abroad.
The senators anticipate the proposal would generate a windfall in revenue that would be used to fund federal transportation projects.
U.S. Senate Minority Leader Mitch McConnell told reporters in the Capitol that Republicans had discussed a corporate tax repatriation “holiday” idea and “it enjoys a good deal of support in our conference.”
In the past, Apple has made no secret that it does not favor the current corporate income tax rate. With current policy, Apple’s repatriated funds would be subject to the 35% corporate income tax meaning it could really only keep 65% of its earnings… Read more
Following the announcement that Apple CFO Peter Oppenheimer will be retiring in September, the Australian Financial Review has uncovered evidence of a scheme that it says has allowed Apple to move around $9 billion in untaxed Aussie profit to Ireland. The program has allowed Apple to get away with paying only $200 million in taxes on $8.9 billion in profit over the past ten years or so.
Here’s how the whole thing works: Apple has created an Ireland-based company known as Apple Sales International which contributes money toward the research and development budget in Cupertino. This allows the company to legally claim an economic stake in these products and gives ASI partial ownership of the intellectual properties that comprise Apple’s products.
In the midst of the U.S. government’s interest in Apple and other large multinationals that “avoid” paying taxes in the U.S. or repatriating funds stored abroad, RudeBaguette.com notes that the French society of authors, composers, and music publishers (SACEM) has announced that Apple owes around 5 million euros in unpaid taxes.
The funds apparently come from unpaid royalties on iPad sales for 2011 that France and other EU countries, such as Germany, collect for devices capable of transferring and displaying copyrighted material:
To give a bit of a background, the copie privée is a tax in several countries including France & Germany that is applied to all digital devices that can transfer, read, or otherwise make use of copyrighted material. The tax goes to the SACEM, which then takes the lump sum of all the taxes collected and deals them out to authors, creators, producers, actors, etc. accordingly… the problem here isn’t so much the tax, but that Apple actually charged the consumers this tax, and didn’t pay it out to the SACEM.
The news comes as reports claim France is beginning to crack down on tax schemes of large companies with plans to force Apple, Google, and others to disclose details of foreign business activities and tax practices: Read more
Apple today has published its testimony proposing corporate tax reform and detailing the company’s tax practices ahead of CEO Tim Cook’s appearance at a Senate hearing on offshore tax practices scheduled for tomorrow.
In the testimony, Apple proposed what it called comprehensive corporate tax reform that should: Be revenue neutral, eliminate all corporate tax expenditures, lower corporate income tax rates; and implement a reasonable tax on foreign earnings that allows free movement of capital back to the US.
While some Subcommittee members may have differing views on these tax policy matters, Apple hopes the Subcommittee will see that these recommendations aim to create meaningful change and go well beyond what most US companies propose. As both a pioneer and participant in the American innovation economy, Apple looks forward to working with the Subcommittee on its efforts to encourage comprehensive reform of the US corporate tax system. Apple appreciates the opportunity to appear before the Subcommittee to contribute constructively to this important debate.
Apple also detailed the company’s current tax practices and noted it “made income tax payments to the US Treasury totaling nearly $6 billion – or $16 million per day.” Apple points out that, at a rate of 30.5%, that accounts for around “$1 out of every $40 of corporate income taxes collected by the US Treasury last year.”
Apple continued by commenting on its recent decision to borrow $17 billion in debt instead of repatriating offshore funds to help fund its shareholder return: Read more
Yesterday Politico reported that Tim Cook will appear before Congress next week to testify in a hearing regarding how the company is handling its overseas finances and domestic taxes, and today Politico has published a brand new interview with the Apple CEO.
Tim Cook and Apple tend to avoid any public discussion aside from comments during quarterly earnings calls, but it seems the company is on a PR offense leading up to next week’s public hearings.
“We don’t have a large presence in Washington, as you probably know, but we care deeply about public policy and believe creative policy can be a huge catalyst for a better society and a stronger economy.”
Cook went on to defend Apple against any accusations that may come its way next week.
“I can tell you unequivocally Apple does not funnel its domestic profits overseas. We don’t do that. We pay taxes on all the products we sell in the U.S., and we pay every dollar that we owe. And so I’d like to be really clear on that.”
The Apple CEO also noted the company’s $100 million project to produce a Mac line in the United States this year, which the company says will add jobs to the economy. Read more