Yesterday’s Senate subcommittee hearing, in which Apple CEO Tim Cook was asked to explain alleged tax avoidance measures, turned into something of a damp squib, each side effectively stating their respective positions rather than engaging in any head-to-head debate …
Senator Carl Levin, Chair of The Senate Permanent Subcommittee on Investigations, gave a lengthy introductory speech which merely repeated the claims already made, and Cook responded with a pretty general statement saying little more than Apple complied with the law and did not use any tax gimmicks. Cook did take the opportunity to argue for tax reform, proposing both lower domestic corporation tax rates and a special ‘single digit’ rate for cash repatriated from overseas subsidiaries.
No light was shed on the specific claims, that Apple has negotiated a special 2% corporation tax rate with the Irish government, and that it operated ‘ghost’ entities that were not legally tax resident in any country. It does appear, however, that the key Irish subsidiary that receives income from European sales does so from revenue streams already taxed in each of the individual European countries.
All involved were at pains to point out that Apple fully complies with the law, and the market appeared to regard the day’s events as irrelevant, Apple’s stock price remaining virtually unchanged.