Apple avoided paying taxes of almost €20 million every day last year by taking advantage of Ireland’s low corporation tax rate and legal loopholes.
A 40-page report by the US Senate Permanent Subcommittee on Investigations said Apple has used shell companies and complex arrangements to lower the tax bill on its global profits. It said in the last four years, Apple has sidestepped a $44 billion (€34bn) tab through the ruses.
The claim in the report that Ireland is “tax haven” will reignite the debate about Ireland’s tax system. Last week Google faced the wrath of British politicians for shielding its UK profits from the taxman there by concluding all sales through Ireland.
The report accused the iPhone and iPad maker of transferring the valuable intellectual property behind its products to Ireland and setting up shell companies that couldn’t be taxed in America.
It also engaged in so-called mark-up pricing, where Apple’s Irish companies would buy finished devices and then re-sell them to other parts of the company at much higher prices and make huge profits.
It also claimed that Apple which employs 4,000 people in its European headquarters in Cork, of getting a special agreement with the Revenue Commissioners to ensure it paid just a 2% tax on its profits.
Apple said in a statement last night that it does not engage in tax “gimmicks” and a Revenue Commissioners said that all companies in Ireland pay the standard 12.5% rate on their trading profits arising in Ireland and they pay a corporation tax rate of 25% on their Irish non-trading income.
However, the report from former US presidential candidate senator John McCain and Senator Carl Levin said some Apple companies registered in Ireland managed to have a tax rate of just 0.05%.
“Apple wasn’t satisfied with shifting its profits to a low-tax offshore tax haven,” Senator. Levin said in a statement.
“Apple sought the Holy Grail of tax avoidance. It has created offshore entities holding tens of billions of dollars, while claiming to be tax resident nowhere.”
