Tuesday, May 21, 2013

Apple avoids taxes on $74 billion with ‘complex web’ of offshore entities...

Apple used a “complex web” of offshore entities — with no employees or physical offices — that allowed it to pay little or no taxes on tens of billions it earned overseas, according to a Senate investigation unveiled Monday.

Between 2009 and 2012, the company shielded at least $74 billion in profits from U.S. tax laws by setting up subsidiaries in Ireland under a special arrangement, the report said. While the practice of using foreign operations to avoid U.S. taxes is legal and common among multinationals, Apple’s scheme was unprecedented in its use of multiple affiliates that had no semblance of a physical presence, Senate staffers said.

The electronics giant’s rootless subsidiaries had just one purpose: to funnel much of the company’s global profits and dodge billions of dollars in U.S. tax obligations, according to the report by the Permanent Subcommittee on Investigations.

One of Apple’s Irish affiliates reported profits of $30 billion between 2009 and 2012, but because it did not technically belong to any country, it paid no taxes to any government. Another paid a tax rate of 0.05 percent in 2011 on $22 billion in earnings, according to the report. The U.S. corporate tax rate is 35 percent.

“Apple sought the Holy Grail of tax avoidance,” said Sen. Carl Levin (D-Mich.), chairman of the committee. “It has created offshore entities holding tens of billions of dollars while claiming to be tax resident nowhere.” Full story...

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