
How Apple sidestepped a 2013 crackdown on its Irish tax practices - gadders
http://www.bbc.co.uk/news/world-us-canada-41889787
======
donutdan4114
The issue with all of these major companies will forever be their "product".

\--- From: Silicon Valley (HBO)

Jack: Richard, I don't think you understand what the product is. The product
isn't the platform, and the product isn't your algorithm, either. And it's not
even the software. Do you know what Pied Piper's product is, Richard?

Richard: Is... Is it me?

Jack: Oh God! No! No. How could it possibly be you? You got fired. Pied
Piper's product is its stock.

\---

When the only product a company cares about its stock, and they only care
about their accountability to the shareholders, we will continue to see mass
tax evasion schemes and using any/all methodologies (including
illegal/unethical) to maximize profits.

~~~
make3
wtf does this even mean. companies will always care about profitability for
their owners. that's the whole point of starting and having a business

~~~
Xylakant
How is this the whole point of starting a business? Elon Musk is often quoted
as using Tesla as a mean to promote electric transportation. Corporate
structures that may never pay dividends to the owners such as gGmbH
(gemeinnützige GmbH) exist and get used in practice. There’s a ton of reasons
to start a business, shaving off the absolute maximum in profits is just one.

~~~
kungito
What Elon Musk is doing is called amazing PR and guerilla marketing. I wish it
wasn't so but I'm eagerly waiting to be corrected

------
rrggrr
If passed, and for a brief period of time, Trump's dollar repatriation tax
scheme brings home some of the +2 trillion dollars sequestered abroad -
including some of the billions Apple has parked offshore.

[http://www.businessinsider.com/trump-gop-tax-reform-plan-
bil...](http://www.businessinsider.com/trump-gop-tax-reform-plan-bill-text-
details-rate-2017-10)

There's something to be said for Apple's efforts to level the playing field
against the favorable tax & public policies under which Samsung and Huawei
Technologies operate. I'm not crying 'boo hoo' for Apple, but their tax
strategies are understandable.

~~~
canuckintime
Or the US Congress could just change the law, close the loophole and require
corporations to bring the money home anyway without any tax holidays...

~~~
mistercow
I'm always skeptical when someone precedes "close the loophole" with the word
"just", especially when the entity searching for loopholes has hundreds of
billions of dollars in cash. Closing loopholes is good, but they'll almost
certainly find another one.

~~~
vidarh
The thing, though, is that their main "loophole" currently consists of "play
chicken with the government until someone passes a tax holiday". If you make
it clear there will never be a tax holiday, but that you will instead keep
adjusting the rules to go after earnings withheld abroad, at some point the
rational choice for them will be to bite the bullet and repatriate the income.

As it is, the most rational choice for them is to keep waiting for that
amnesty/tax holiday unless they badly need the cash.

~~~
DigitalJack
In this case it's not a loophole in American laws. It's a problem with
European and Carribean laws. This money was earned abroad. Blame the Irish,
and now whatever this Jersey Island place is.

The EU made a move to close the loophole, apple found another.

I suppose there are loopholes with them selling IP assets to subsidiaries. But
that's a different loophole than the one with them floating money around
different countries. That money wasn't earned in America, so why are you
trying to "repatriate" it? The better term would be "appropriate" it as it was
never here in the first place.

Until it costs more for apple to pay interest on a loan (and/or penalties and
fines) than they would pay in taxes, that money will never come here.

~~~
deong
The US government doesn't, as a general rule, care if the money has ever been
here. If you as a private US citizen choose to live and work abroad, you are
required to file US income taxes and declare all foreign income. And depending
on the precise details of the foreign government's treaty situation and tax
rates, you may be required to pay the normal US tax rate on some or all of
that income.

I don't know that it counts as a "loophole" exactly that the system for
corporations works the way it does. "Loophole" sort of implies an unintended
consequence, when the reality is that the laws are written with the express
purpose of making this type of tax avoidance possible.

~~~
landryraccoon
> If you as a private US citizen choose to live and work abroad, you are
> required to file US income taxes and declare all foreign income.

Do you support this practice though? Does any other country try to tax people
for income earned entirely abroad? This puts US citizens at a disadvantage
compared to citizens of say, the EU.

~~~
sokoloff
The US and Eritrea are the only two.

In practice, the US has tax treaties with most other nations that permit
foreign taxes paid (on income that would be taxable federally, so not on
wealth taxes) to be taken as a dollar-for-dollar credit. That means that any
country with a lower tax rate than the US will generally not increase your
overall income tax bill. If you owed $X to a foreign country and $Y to the US
for work done in the foreign country, you pay $X to the foreign country
(regardless) and if Y is greater than X, you pay $(Y-X) to the US.

------
DINKDINK
Point of debate:

Why should Apple have the US government lay claim to the revenue/profits that
it generates in non US countries?

From the article: "This allowed Apple to funnel all its sales outside of the
Americas - currently about 55% of its revenue - through Irish subsidiaries
that were effectively stateless for taxation purposes, and so incurred hardly
any tax."

If you support the taxation, do you also support the IRS taxing the wages of
expats living abroad?

~~~
lbotos
Doesn't it already? I've been under the impression that is one of the big
"things" about being an American. You will always pay taxes to the US:

"If you are a U.S. citizen or resident alien, the rules for filing income,
estate, and gift tax returns and paying estimated tax are generally the same
whether you are in the United States or abroad. Your worldwide income is
subject to U.S. income tax, regardless of where you reside."

Per [https://www.irs.gov/individuals/international-
taxpayers/taxp...](https://www.irs.gov/individuals/international-
taxpayers/taxpayers-living-abroad)

EDIT: To answer your question, no, I don't like that, but I don't think
"companies" should be exempt.

~~~
namelost
For the US to start taxing Apple's foreign income abroad is not like taxing an
American living in Ireland (and even that is crazy). It's like if the US
started taxing an _Irish_ person in Ireland[1].

However obvious it is that EU Apple is a sock puppet of US Apple, directly
imposing taxes on foreign companies operating in foreign countries would be
met with retaliation. It is not a smart nor a profitable trade policy.

[1] This actually does happen:
[https://en.wikipedia.org/wiki/Accidental_American](https://en.wikipedia.org/wiki/Accidental_American)

~~~
enraged_camel
>>For the US to start taxing Apple's foreign income abroad is not like taxing
an American living in Ireland (and even that is crazy). It's like if the US
started taxing an Irish person in Ireland[1].

I'm not sure I follow. Apple is an American company.

~~~
loopbit
No, Apple US is a shareholder of Apple EU. The US can tax Apple US for
whatever income they get from Apple EU, but they can't tax Apple EU

------
komali2
If you unplugged Apple's board (or given decision-making apparatus) and
plugged in a (currently nonexistent) AI with the parameter "Maximize Profit,"
would you see a different result? I think not. I think we'd see things far
more morally horrifying, in fact, with just enough PR makeup to ensure
"maximized profit."

Unsure why we laud capitalism and then act horrified at the result. Here in
America we've made our decision - profit rules above all else. It is more
profitable to lobby congress than it is to upgrade a refinery, it's more
profitable to auto-deny every health insurance claim than it is to provide the
services your customers think they're paying for, it's more profitable to
avoid taxes than not (as long as you can avoid breaking the law TOO hard).

~~~
sol_remmy
If you unplugged the government's board (or given decision-making apparatus)
and plugged in a (currently nonexistent) AI with the parameter "Maximize Power
of Government," would you see a different result? I think not.

\-----

My point is that you are implying government is the alternative ("they will
govern morally! academics will keep them in check! journalists will keep them
in check!") then you need to rethink your conclusions

~~~
javajosh
Government, by definition, has total power over it's space. That power is
systematically reduced by the law (every positive individual right is a
restriction on government). Reductions (law) are enacted by the people (in the
US, the members of Congress are "the people"). If we can speak, if we can
vote, then we have, theoretically, the ability to set the dial of government
power anywhere from 0 (Somalia) to totality (North Korea).

There are obvious constraints on this slider. Set the slider too low, and a
weak government is vulnerable to take-over. Set too high, the people are
oppressed, unhappy, and will revolt.

The West's slider is pretty firmly in the middle, although it's uneven from
policy to policy (it's set very low on gun ownership; it's set very high on
commercial flying).

The US Federal government could acquire far more power in a variety of ways.
For example, they could federalize local law-enforcement. They could run
drones within our borders, for both surveillance and assassinations. They
could outlaw independent media and control all media output (a la Russia).
They could require us all to carry Federal ID and require us to show this ID
to any law-enforcement on-demand, for any reason. They could require us to run
special DRM/tracking software in our smartphones, and fine/jail us if we
remove it.

~~~
pmyteh
Government, by definition, has a monopoly on the legitimate use of force
within its territory. But it doesn't (even in theory) have total control over
its space. It's constrained by its ability to fund and apply force (military
dictatorships aren't inherently stable), by its relationships with
stakeholders both inside and outside its borders, and to some extent by the
consent (or at least the acquiescence) of its public.

To put it in a more concrete sense, the government can decide to tax whisky at
a rate of $1m per barrel. But it almost certainly doesn't have the power to
enforce this against moonshiners, rights and law or otherwise.

------
RingwormOne
Don't fault corporations for exploiting legal loopholes to save money... They
optimize what they must optimize as operating businesses, and if we the
citizens want to compel them to do something we must pass the laws necessary
to do so...

Stop moralizing the behavior of companies. They aren't humans.

If you choose not to buy apple products in reaction to their behavior, great.
If you want to convince your friends to do the same, great. But legal
repercussions are reserved for law breaking entities. Loophole exploitation is
not law breaking.

~~~
nautilus12
I disagree with this whole heartedly. Laws like this are not deterministic
procedures, they are more like best practices. Can you seriously argue that
Apple is not a functioning member of society? For many its a daily companion.

It should be held accountable to behave like a good citizen within society
like everyone else and not find ways to sidestep the law.

If society can oust an individual like Weinstein and hold them accountable for
their actions why not a company? A company consists simply of a group of
individuals making decisions with moral implications no different than an
individual. Demoralizing companies is the most irrational proposal I've ever
heard. Capitalism is not a computer program, it is a set of guiding principles
meant to operate within a society of well intentioned and reasonable
individuals that are held accountable for their actions.

~~~
DigitalJack
The entire and only purpose of laws and regulations is to dictate behaviors
and punishments in a theoretically fair manner.

If a law is not broken, then any punishment would very likely be unfair as it
would not be evenhanded in application.

I feel American political problems are rooted in having a professional
political class, and a system in which politicians can enrich themselves by
legislating.

If I were king, I would enact short term limits and regulation preventing any
politician from increasing their networth while in office and for a period
thereafter. Not applicable to myself of course.

~~~
tomxor
> If I were king, I would enact short term limits and regulation preventing
> any politician from increasing their networth while in office and for a
> period thereafter

As an aside... I can't see this ever working, it wouldn't prevent monetary
bribery, it would just arbitrarily defer it. I suppose it would at least make
it less attractive, but that is subjective.

------
microcolonel
When talking about "tax avoidance", it is important to be fair. There is only
one question, "Is this illegal?", and that question has only two answers.
Either it's not illegal, and the onus is on you to lobby for and define laws
which achieve your goals, or to simply accept things as they are; or it is
illegal, and the onus is on your prosecutors to prosecute.

Avoiding taxes is the rational, moral, and fair thing to do. People should not
be punished for playing by the rules, because then it becomes arbitrary.

~~~
_rpd
I think the EU knows very well that it needs a uniform tax code. This faux
outrage - "I am shocked—shocked—to find a tax haven in the channel islands!"
\- is just laying the political groundwork for the project.

------
nautilus12
Unpopular opinion: Since did "technically" following the law matter more than
a companies reputation, both with the public and with the government and
society in which it resides.

If my neighbor built a giant flashing neon sign facing my bedroom window and
it was somehow "technically" within the bounds of the law I would still be
ticked off, even if my neighbor provided me with iCloud sync. The problem is
that Apple avoiding taxes isn't as blatant and irritating as a neon sign in
our window, but it SHOULD be when we go to pay our taxes. We should feel
immediate outrage at anyone that isn't pulling their weight, especially when
there are individuals in government trying to get us to pay even more in our
taxes to make up the difference.

Get apple to pay their damn taxes first. ONLY then you can talk to me about
upping my taxes to fund something like universal free college education.

------
jakozaur
Maybe developed countries should agree on minimal profit tax for
multinationals?

E.g. 10% of profits for companies that have revenue larger than X mln / year?

Right now it's race to bottom and there will be another loophole. So much of
energy of smart people goes to tax minimization instead of finding a useful
way to reinvest those money.

~~~
neil_s
+1! You can try to apply morals to companies in an internationally competitive
environment all you want, but it ain't gonna happen. The only way to ensure
they can't play governments against each other is to effectively make a
cartel. How you'd get over the collective action problem and prevent countries
from defecting is beyond me though, would probably need something like the
OECD to pass a resolution.

Most current tax havens are UK dependencies, so such an agreement would have a
significant impact. Additionally, individual countries could do something like
what the US does with its citizens - if you've paid a sensible amount of tax
abroad, great; if not, pay the difference here. You can locate wherever you
want, but relocating to save on taxes becomes moot.

~~~
hackerboos
The UK doesn't benefit from protecting these dependencies and we're a change
of government away from seeing them all brought to heel.

[https://www.theguardian.com/news/2016/apr/05/uk-could-
impose...](https://www.theguardian.com/news/2016/apr/05/uk-could-impose-
direct-rule-on-tax-havens-says-jeremy-corbyn-panama-papers)

------
yawz
_> "...We do not stash money on some Caribbean island."_

Nope. Just Jersey. Much less exotic!

~~~
snowpanda
For those interested:

[https://youtu.be/KPLXrkTZ8mo?t=41s](https://youtu.be/KPLXrkTZ8mo?t=41s)

------
abalone
This is all a bit misleading. The general tone of the article is "Apple's not
paying their fair share in Europe." The bigger context here is these are taxes
owed mostly to the United States. That's where most of Apple's value-creating
work is done and that's traditionally how international tax law works. What's
happening is, Apple is parking funds in offshore tax havens while lobbying
Congress to lower the tax rate for repatriating funds to the U.S. from ~40%,
which they think is too high. So all this talk of "avoiding" taxes is true but
it's a temporary avoidance.

That matters because it affects what would happen if Europe were to raise
taxes. It wouldn't necessarily mean that Europe starts getting Apple's taxes
moving forward. It would just eliminate the possibility of parking funds in
Europe like this. Maybe it would prompt Apple to look outside Europe for
havens. Or perhaps it would impact the stalemate that exists between
U.S.-based multinationals and Congress. Ultimately, Congress doesn't want to
miss out on those taxes in the long run and Apple doesn't want to get double-
taxed when they repatriate. That's why Cook calls it "political crap"...
Changes probably wouldn't benefit Europe in the long run.

~~~
charlesdm
> that's traditionally how international tax law works

No, that is how US tax law works. Most jurisdictions traditionally do not tax
foreign earnings, but exempt them.

------
csomar
I think the clash between globalization and countries (sovereign governments)
is just being delayed for no good. It is proving more and more that
globalization doesn't work with sovereign governments.

Case in point: Let's say the US government gets strict with Apple and taxes it
heavily. Apple already produces its iPhone hardware in China. Its sales are
derived from the whole world and the Chinese market might become bigger than
the American one. So Apple could just move to an off-shore jurisdiction that
is out of hand of the US government.

Boom. Apple escapes the US tax penalty. They might even be able to carry on
their US engineer development while being listed as a Hong Kong or Singapore
company. The only way to stop that, is for the US to pressure these smaller
off-shore city-states.

But smaller and other non-major countries can't do that. So big corporations
will be able to screw them. In the end, you'll either end up with weak
governments which end up breaking down under the negative financial effect; or
have the US rule the world "fiscally".

It seems that we are going for the latter:
[https://en.wikipedia.org/wiki/Foreign_Account_Tax_Compliance...](https://en.wikipedia.org/wiki/Foreign_Account_Tax_Compliance_Act)

------
patresh
Why is it that criminal laws are judged on a case by case basis and tax code
is so inflexible?

For instance, in states that allow shooting trespassers, you could buy a patch
of sidewalk and shoot anyone that walks into it. I doubt that you would get
off scot-free since in criminal law you always consider context.

Why is that notion of context impossible to include in the tax code and leave
some interpretability to the judge? This would make these loopholes more risky
and therefore less attractive.

~~~
x220
Criminal cases in nearly all jurisdictions in the United States are not judged
on a case-by-case basis. They are judged on precedent.

------
wukerplank
> What could Apple buy with its offshore cash

The examples are ridiculous. How many teachers, nurses, doctors could you
employ with that money, had it been properly taxed?

------
runesoerensen
Apple has now issued this statement on their tax payments
[https://www.apple.com/newsroom/2017/11/the-facts-about-
apple...](https://www.apple.com/newsroom/2017/11/the-facts-about-apple-tax-
payments/)

------
aaron-lebo
_Steve Jobs: What if the computer was a beautiful object? Something you wanted
to look at and have in your home. And what if instead of it being in the right
hands, it was in everyone 's hands?

John Sculley: We'd be talking about the most tectonic shift in the status quo
since...

Steve Jobs: ...ever._

Wonder if Sorkin could make a $1,000 phone and tax avoidance sound good? When
did Apple change from being about the average person to being about the ultra
rich, or has it always been this way? Maybe it's an unethical company not
worth supporting anymore.

Way too much of the tech industry has come off as immoral and greedy this past
weekend with these revelations. How do we reboot?

~~~
madeofpalk
What's this got to do with the tech industry? Doesnt every industry have this
problem. Ikea is particularly well known for their ability to minimise tax.
Mining/resources companies are currently under a lot of scrutiny in Australia
for the same thing.

------
tareqak
Techmeme summary: _BBC: Paradise Papers: Apple shifted to new tax haven of
Jersey, after crackdown by European regulators of its Irish tax arrangement,
sought to keep move secret_

------
herodotus
Apple employees earn a lot of money and pay taxes in the jurisdiction in which
they live. Companies use their profits either to give dividends to their
shareholders (and these are taxed), or to invest in new products or business
activities. I think it is counter-productive for governments to go after
company taxes.

------
mzs
other details:

[https://www.icij.org/investigations/paradise-
papers/apples-s...](https://www.icij.org/investigations/paradise-
papers/apples-secret-offshore-island-hop-revealed-by-paradise-papers-leak-
icij/)

------
polskibus
I wonder who else uses those tax tricks. Why isn't there somekind of SaaS that
enables tax avoidance for everyone ?

------
tryingagainbro
I'm with Apple on this one. The government can make it illegal if they wanted
to. But it's not so Apple of John Doe should not be bothered for doing legal
things when it comes to taxes.

If what they're doing is illegal, slap them with a fine too (like EU
did...it's currently on appeal i think)

------
lucio
>What could Apple buy with its Offshore cash?

Just 1 month of 2017 US Federal Gov outlays.

If you make Apple pay all its accumulated cash as taxes, you can run the US
Fed Gov from January 1st to January 31 (IF my calculations are correct)

------
zeristor
Maybe Britain should invade Jersey?

~~~
hex20
I don't think you can invade part of your own country. The UK can pass any
laws it wants in Jersey.

~~~
mprev
Jersey isn’t part of the UK. The UK is responsible for the defence of jersey,
so that’s something of a bargaining chip, perhaps.

------
argo_
anybody seeing a message asking for a flash update in the first video?
[https://i.imgur.com/mIQIKLx.jpg](https://i.imgur.com/mIQIKLx.jpg)

possibly a Bad Rabbit injection? -_-

------
Cr4shOv3rrid3
Test!!!

------
Cr4shOv3rrid3
need another karma point for keybase.io somone wanna help me out with that?

~~~
kbhn
Try getting someone to help you out by, you know, posting something
meaningful.

