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EU Ruling Allows Apple to Continue Dodging Taxes

image credit: ITEP

By Chand Bellur

July 16, 2020 at 2:34 p.m. PT

  • Apple avoids paying taxes by shifting profits into three Irish subsidiaries.
  • The European Commission sued Apple, attempting to hold them accountable for dodging taxation in the EU.
  • Apple appealed the case, and an EU court sided with the Cupertino tech giant, allowing them to forgo taxation.

Apple’s Cunning Scheme to Avoid Taxation

A few days ago, most Americans had to file and pay their taxes. I run a business, so I had to file and pay taxes for my LLC. I do this every year, and I pay my taxes entirely and fairly, like most Americans.

Large, multinational corporations follow a different set of rules. They’re able to hire wily tax consultants who can help them avoid taxation, almost entirely. The process involves selling intellectual property through foreign subsidiaries, which allows multinational corporations to under-report profits. The real profits end up in tax havens, such as Ireland, the Cayman Islands, or the far off land of Delaware.

Apple, a company that seems to do everything better than the competition, is also the best at dodging taxes. Two of their “Irish” subsidiaries don’t actually exist in Ireland or the U.S. They also struck a sweetheart deal with the Irish government for minimal taxation at a 0.005% rate, allowing them to dodge a $14 billion tax bill.

If that’s not enough, most of Apple’s profits reside in stable, insured U.S. banks. Apple avoids taxation by claiming that the profits are under foreign control.

Although Apple isn’t the only multinational corporation that plays this shell game, it’s one of the best at it. All the while, we live in a nation with no high-speed rail, poor medical infrastructure, and horrible public education. Adding insult to injury, corporations like Apple recruit offshore workers, claiming that there aren’t enough intelligent Americans to fill high tech jobs.

European Commission Sues Apple for €13 Billion

Unlike the United States, most European nations believe in society. They spend tax revenues to ensure that their nations have the essentials such as education, health care, public transportation, and retirement. Their citizens and residents, more educated and conscientious than us, have flattened the curve of a devastating pandemic by placing their faith in experts, rather than trusting narcissistic sociopaths.

Instead of homes covered with solar panels, European governments have taken on generating renewable energy. The way things are going, Americans may need to dig their own wells and grow their own food, as corporations gobble up tax revenues, without contributing even close to their fair share.

For all of these reasons, the European Commission does what U.S. authorities are afraid to do — challenge one of the biggest corporations on the planet, asking them to pay their fair share of taxes. After all, some nations don’t want to descend back into feudalism.

The initial verdict ruled that Apple must pay €13 Billion to the EU. As with most judiciary systems, the EU courts allow numerous appeals. With the court ruling, Apple won the appeal as there wasn’t sufficient evidence to prove that the company engaged in anti-competitive practices. In other words, Ireland gave them a tax break, which they’re entitled to do. It wasn’t the result of anti-competitive behavior. At least no one could prove that, because it’s challenging to do.

Although the European Commission has 14 days to appeal this decision, they’re battling one of the largest corporations on the planet. Apple handles legal challenges with grace, using PR to cover up their malfeasance. It’s likely that Apple will never pay that €13 Billion to the EU.

Apple Claims They Pay More Taxes Than Any Corporation

Apple works hard to cover up their tax conspiracy. Although their process is legal, it’s unethical. It robs governments around the world of much-needed revenues.

Apple claims a worldwide taxation rate of approximately 26%. This was before the U.S. corporate tax rate dropped from 35% to 21%. Keep in mind, the techniques they use to dodge taxation involve under-reporting profits. The 26% effective tax rate is the result of a gross under-reporting of profits. The bulk of Apple’s profits reside in tax havens, dodging most of their tax liability.

At the end of the day, most people don’t care if Apple pays taxes or not. They just want the new, shiny iPhone and can’t figure out why our infrastructure is falling apart. This presents opportunities for political pundits to shift the blame to one party or another. This is beyond partisan politics. It’s beyond the United States.

Unfortunately, this phenomenon creates a feedback effect. Without tax revenues, public education suffers, as the schools are poorly-funded. An ignorant public is susceptible to misinformation. The politics of divide and conquer fill the vacuum, ensuring no solution to this devastating problem.


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