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[CyclopsRock]

Yeah, no companies lobbied for the tax laws in place. Not one of them.

So? It's the elected government's responsibility to ensure there are fair and equitable tax laws (though it's also their responsibility to do best by their citizens, which the Irish government may well be doing - it's just not as good for Spain, the UK, Germany etc). That corporations lobbied is neither here nor there - these laws exist because there's a symbiotic relationship (low taxation vs job creation in a given location) between businesses and countries. Countries need businesses and one of the ways they have to compete for them is tax rates.

Lobby, shlobby. "Dirty" lobbying is when Malboro send a legislator in a free trip to Hawaii in exchange for favours on tobacco laws, benefiting themselves at the expense of the people they represent. What we have here is countries legislating in a way that benefits them at the expense of other countries, which they already have plenty of incentive to do.

 

[RJT]

There's no way we are gonna change that corporate taxation rate. That's single handedly attracted big companies to set up here. To fuck with the the tax rate would mean potentially killing 1000s of Irish jobs and losing large amounts of money.

Again, no way we will change the the corporate tax rate.

That's irrelevant: Apple sells products all over Europe and should pay taxes for that business in those countries.

 

[Dead Man]

So? It's the elected government's responsibility to ensure there are fair and equitable tax laws (though it's also their responsibility to do best by their citizens, which the Irish government may well be doing - it's just not as good for Spain, the UK, Germany etc). That corporations lobbied is neither here nor there - these laws exist because there's a symbiotic relationship (low taxation vs job creation in a given location) between businesses and countries. Countries need businesses and one of the ways they have to compete for them is tax rates.

Lobby, shlobby. "Dirty" lobbying is when Malboro send a legislator in a free trip to Hawaii in exchange for favours on tobacco laws, benefiting themselves at the expense of the people they represent. What we have here is countries legislating in a way that benefits them at the expense of other countries, which they already have plenty of incentive to do.

Never said it was dirty lobbying, calm the fuck down. The point is that those lobbying for a particular thing bear culpability for that thing.

 

[Funky Papa]

Official PR from the EC:

According to Article 107(1) of the Treaty on the Functioning of the European Union (TFEU), state aid which affects trade between Member States and threatens to distort competition by favouring certain undertakings is in principle incompatible with the EU Single Market. Selective tax advantages may amount to state aid. The Commission does not call into question the general tax regimes of the three Member States concerned.

Tax rulings are used in particular to confirm transfer pricing arrangements. Transfer pricing refers to the prices charged for commercial transactions between various parts of the same group of companies, in particular prices set for goods sold or services provided by one subsidiary of a corporate group to another subsidiary of the same group. Transfer pricing influences the allocation of taxable profit between subsidiaries of a group located in different countries.

If tax authorities, when accepting the calculation of the taxable basis proposed by a company, insist on a remuneration of a subsidiary or a branch on market terms, reflecting normal conditions of competition, this would exclude the presence of state aid. However, if the calculation is not based on remuneration on market terms, it could imply a more favourable treatment of the company compared to the treatment other taxpayers would normally receive under the Member States' tax rules. This may constitute state aid.

The Commission will examine if the three transfer pricing arrangements validated in the following tax rulings involve state aid to the benefit of the beneficiary companies:

the individual rulings issued by the Irish tax authorities on the calculation of the taxable profit allocated to the Irish branches of Apple Sales International and of Apple Operations Europe;

the individual ruling issued by the Dutch tax authorities on the calculation of the taxable basis in the Netherlands for manufacturing activities of Starbucks Manufacturing EMEA BV;

the individual ruling issued by the Luxembourgish tax authorities on the calculation of the taxable basis in Luxembourg for the financing activities of Fiat Finance and Trade.

The Commission has reviewed the calculations used to set the taxable basis in those rulings and, based on a preliminary analysis, has concerns that they could underestimate the taxable profit and thereby grant an advantage to the respective companies by allowing them to pay less tax. The Commission notes that the three rulings concern only arrangements about the taxable basis; they do not relate to the applicable tax rate itself.

The probe will focus on the states instead of the companies, which will make easier to lay new tax policies across Europe in the future. I imagine that the EC won't take action against Apple (and any other companies) per se until it has finished its current probes in Ireland et all or has enought proof of fraud on their part, as the whole situation is incredibly gray.

 

[linsivvi]

I see some people are going to be defending Apple no matter what. Even if they screw their own countries. OK.

Never said it was dirty lobbying, calm the fuck down. It is unethical and immoral to me. Deal with it. The point is that those lobbying for a particular thing bear culpability for that thing.

This.

 

[RJT]

Official PR from the EC:


Tax rulings are used in particular to confirm transfer pricing arrangements. Transfer pricing refers to the prices charged for commercial transactions between various parts of the same group of companies, in particular prices set for goods sold or services provided by one subsidiary of a corporate group to another subsidiary of the same group. Transfer pricing influences the allocation of taxable profit between subsidiaries of a group located in different countries.

This is the most important thing: there is already laws in place to stop this kind of deals, but they require the state to properly audit the companies. Properly enforced, there is no way for such a large company to avoid being taxed. I'm glad the EC is looking at this.

 

[figadapaura]

Good. Drag them through the mud.

 

[werks]

I don't think anyone would argue that their Irish operations are a shell.

The theoretical ground for profit shifting is based on risk and investment.

If Apple spent $300 (including R&D, labor, marketing) to make an iPad and then sold an iPad to Best Buy/Wal-Mart/whatever for $490 and Best Buy sells it for $500, that high profit margin for Apple and low profit margin for Best Buy is generally understandable, I believe. The concerns/arguments arise once the third party retailer is removed (even though legally a subsidiary is considered a third party).

Now what if Apple sold an iPad to a European subsidiary, which does nothing but operate online and retail stores. Does it make sense for the European subsidiary to make a margin equivalent to Best Buy/Wal-Mart, or is it doing operations that are more equivalent to Apple HQ? If there is no contribution to the risk that R&D and investment to make the iPad from the European subsidiary, do they deserve to have that high profit margin that Apple HQ generally enjoys, or are they more like a reseller?

There are arguments either way of course, but I hope my illustration helps show that it is not a cut and dry issue.

But apple HQ isn't getting the profit margins. What you outlined is the exact reason what apple is doing is legal, so profits can be shifted to where the risk and r&d is. Not so that you can create another shell subsidiary that has no risk or expenses just to evade taxes.

If apple was operating how you suggested, the profits would be coming to america... And subject to america taxes.

 

[numble]

Official PR from the EC:



The probe will focus on the states instead of the companies, which will make easier to lay new tax policies across Europe in the future. I imagine that the EC won't take action against Apple (and any other companies) per se until it has finished its current probes in Ireland et all or has enought proof of fraud on their part, as the whole situation is incredibly gray.

I know you highlighted this:

If tax authorities, when accepting the calculation of the taxable basis proposed by a company, insist on a remuneration of a subsidiary or a branch on market terms, reflecting normal conditions of competition, this would exclude the presence of state aid.

But I think the truth would be that the "market terms" that they will be based on would be on the market terms that would go to a third party retailer, which is what Apple Retail France, Apple Retail UK, Apple Retail Germany etc are comparable to. Basically, they would look at the contracts at which they sell devices to 3rd party retailers like WalMart, or even those 3rd Party Apple retailers that are in many countries, and see if the contracts with their subsidiaries are on comparable terms. And it is well-known that retail operates at low margin.

But apple HQ isn't getting the profit margins. What you outlined is the exact reason what apple is doing is legal, so profits can be shifted to where the risk and r&d is. Not so that you can create another shell subsidiary that has no risk or expenses just to evade taxes.

If apple was operating how you suggested, the profits would be coming to america... And subject to america taxes.

Apple Ireland has 4000 employees and nobody would characterize it as a shell. Look at how airplanes are registered to Air Leasing Company [Airplane Serial Number], LLC if you want to find real shells.

I see some people are going to be defending Apple no matter what. Even if they screw their own countries. OK.

Don't be reduced to straw man arguments. Why don't you address arguments that I make instead of just calling people Apple defenders?

 

[CyclopsRock]

Never said it was dirty lobbying, calm the fuck down. The point is that those lobbying for a particular thing bear culpability for that thing.

Chill out my friend, no need to swear. That might be your point; My point is that I disagree. It's the responsibility of those that write, and then vote for, legislation for the results of that legislation, because these are the people with a mandate from the people to do the right thing. And I imagine most are feeling pretty pleased with themselves, and not because they're being sent to Hawaii.

 

[Dead Man]

Chill out my friend, no need to swear. That might be your point; My point is that I disagree. It's the responsibility of those that write, and then vote for, legislation for the results of that legislation, because these are the people with a mandate from the people to do the right thing. And I imagine most are feeling pretty pleased with themselves, and not because they're being sent to Hawaii.

I'll fucking swear if I want, don't moralise to me.

Edit: Your point bears no relation to my point. You posted an unrelated rant about dirty lobbying. Responding to what people actually write is pretty useful, you should practise.

If you ask for something, you bear responsibility for receiving it.

 

[CyclopsRock]

I'll fucking swear if I want, don't moralise to me.

calm the fuck down.

I think perhaps tax legislation is an area we disagree on. Personally, it's the very thing that gets me up in the morning. In more ways than one.

 

[Walshicus]

And it's the responsibility of the Commission to ensure that the Treaties are upheld with regard to violations of the Single Market.

 

[Dead Man]

I think perhaps tax legislation is an area we disagree on. Personally, it's the very thing that gets me up in the morning. In more ways than one.

Are you okay?

 

[Funky Papa]

Apple Ireland has 4000 employees and nobody would characterize it as a shell. Look at how airplanes are registered to Air Leasing Company [Airplane Serial Number], LLC if you want to find real shells.

While it doens't conform to the definition of shell company, it largely acts like one when Apple, despite being an American corporation (and one of the wealthiest in the world at that) needed to ask money to the banks in order to pay its investors, as most of its cash is located elsewhere so it's not taxed upon repatriation. This is exactly why shell corporations and tax havens are destroying the world's economy.

The Beats deal? That will be done outside of America using offshore money. You best believe Apple is going to pay peanuts in taxes despite being the main actor in a multibillion dollar deal between two American companies.

It's a ridiculous situation.

 

[linsivvi]

While it doens't conform to the definition of shell company, it largely acts like one when Apple, despite being an American corporation (and one of the wealthiest in the world at that) needed to ask money to the banks in order to pay its investors, as most of its cash is located elsewhere so it's not taxed upon repatriation. This is exactly why shell corporations and tax havens are destroying the world's economy.

The Beats deal? That will be done outside of America using offshore money. You best believe Apple is going to pay peanuts in taxes despite being the main actor in a multibillion dollar deal between two American companies.

It's a ridiculous situation.

Well hopefully the EU can at least do something about it. There's little hope that the American government would do anything to close the loop holes.

 

[Funky Papa]

Well hope the EU can at least do something about it. There's little hope that the American government would do anything to close the loop holes.

Apple (and other corporations) is lobbying pretty heavily for tax vacations so they can bring a good chunk of their offshore money to the States without paying for it. Because of reasons.

 

[numble]

While it doens't conform to the definition of shell company, it largely acts like one when Apple, despite being an American corporation (and one of the wealthiest in the world at that) needed to ask money to the banks in order to pay its investors, as most of its cash is located elsewhere so it's not taxed upon repatriation.

The Beats deal? That will be done outside of America using offshore money. You best believe Apple is going to pay peanuts in taxes despite being the main actor in a multibillion dollar deal.

It's a ridiculous situation.

I don't think keeping money offshore makes it a shell company. A shell company is a shell with no substance. Avoiding taxes on repatriation does not make a company a shell. If I am a corporation, and I earn profit of $100K selling widgets in China, pay my $25K in Chinese tax, leaving me with $75K, and I take that back to the US, I need to pay a corporate tax of 35% on it (with credit for Chinese tax already paid), and then if I want to give it out as dividends to my investors, they need to pay up to 39.6% on that dividend.

From $100K profit, you get to $75K (after Chinese tax) and then $65K (after repatriation tax) and then $39.3K (after dividend tax). That's why it makes sense to just borrow money instead of going through the triple layers of taxation to pay your investors. It makes sense to spend it offshore if you can instead of repatriate it for dividends. It has nothing to do with being a shell company. Oops--I also forgot to include the 10% dividend withholding tax that China charges when you move money offshore (so it is actually more like quadruple levels of taxation), I think that is not deductible against US corporate tax, but I may be wrong.

The Beats deal is paid with offshore money because Beats is held offshore. If it was a domestic company it would probably be paid with domestic money.

 

[RJT]

But apple HQ isn't getting the profit margins. What you outlined is the exact reason what apple is doing is legal, so profits can be shifted to where the risk and r&d is. Not so that you can create another shell subsidiary that has no risk or expenses just to evade taxes.

If apple was operating how you suggested, the profits would be coming to america... And subject to america taxes.

You're contradicting yourself. More profit should be going to America, and that alone proves that what Apple is doing is not legal.

Also, some numbers:
-Apple's UK turnover was £1bn and its profits were £81.3m. Thats a 0.8% profit margin (source).
-Tesco's profit margin is around 10% (source).

There, I proved

Spoiler

not that Apple is not doing its transfer pricing properly but that

I am dumb in 5 minutes (yes, I know things are more complicated than that, but there's no way to justify a less than 1% profit margin in a booming specialized retail scenario).

EDIT: due to me being dumb

 

[CyclopsRock]

And it's the responsibility of the Commission to ensure that the Treaties are upheld with regard to violations of the Single Market.

They're welcome to - all countries should be subject to the law.

 

[numble]

You're contradicting yourself. More profit should be going to America, and that alone proves that what Apple is doing is not legal.

Also, some numbers:
-Apple's UK turnover was £1bn and its profits were £81.3m. Thats a 0.8% profit margin (source).
-Tesco's profit margin is around 10% (source).

There, I proved Apple is not doing its transfer pricing properly in 5 minutes (yes, I know things are more complicated than that, but there's no way to justify a less than 1% profit margin in a booming specialized retail scenario).

Your calculation indicates over 8% profit margin.
81,300,000/1,000,000,000 = 0.0813 or 8.13% profit margin.

 

[RJT]

Your calculation indicates over 8% profit margin.
81,300,000/1,000,000,000 = 0.0813 or 8.13% profit margin.

Oh shit, you're right. I still think Apple retail should have a higher margin than general retail like Tesco, but that was incredibly dumb of me...

 

[linsivvi]

Oh shit, you're right. I still think Apple retail should have a higher margin than general retail like Tesco, but that was incredibly dumb of me...

Well you left out the most important part...

However, analysis of its filings in America suggest a more realistic figure for UK turnover is £6.7bn. This would imply an estimated profit of £2.2bn and, at the then corporation tax rate of 26pc, a £570m tax bill, the Sunday Times reports.

 

[i_am_ben]

Apparently this year's G20 summit is focusing on tax loops used by Apple, google etc.

 

[numble]

Well you left out the most important part...

That analysis is based on an assumption that the UK is 1/10th of Apple revenue. I don't think there is any basis to that analysis. For instance, while Apple is getting revenue from carriers or 3rd party retailers that sell Apple products, that does not involve Apple Retail UK, while the carriers and third party retailers are likely paying an Irish entity for the right to sell the Apple products. While the revenue eventually makes it into Apple's total accumulated earnings, that specific profit should not be taxed to Apple Retail UK, they should be taxed to the the parties that generated the income. We already do know that Apple Retail only accounts for a small percentage of iPhone sales in the US:

15% of Apple US sales are attributed to Apple Retail US. And what do you know, 1 billion Apple Retail UK out of 6.7 billion Apple UK revenue actually translates to 15% revenue, putting it right in line with the US distribution.

I don't think these companies are involved with lying about revenue numbers these days. The avoidance problems lie in transfer pricing issues, not false revenue reporting--they report accurate revenue but say that profits are eaten up by payments to their Irish parent.

 

[sixpackrules]

In Spain the normal workers pay 9 of every ten euros of the total of the taxes, the big companies have a gazillion deductions and pay 3.5% , is a joke

 

[avaya]

Oh yes. Alumunia going for the shakedown. These fuckers along with the other stateless cunts like GOOG can get bent. Their behaviour is utterly indefensible.

I'm sure the BNP joke fine will also mean the French are well up for this as well.

Time for the EU cash grab. Love it.

 

[linsivvi]

Oh yes. Alumunia going for the shakedown. These fuckers along with the other stateless cunts like GOOG can get bent. Their behaviour is utterly indefensible.

I'm sure the BNP joke fine will also mean the French are well up for this as well.

Time for the EU cash grab. Love it.