Paradise Papers Reveal Apple's Use Of Tax Havens

Posted November 08, 2017

At the start of 2015, the company restructured its affairs in Ireland, and changed the tax residency of Apple Sales International (ASI) and Apple Operations International (AOI) to Jersey, allowing them to maintain their ultra-low tax rates.

It said it remained the world's largest taxpayer, paying about $35bn (NZ$49bn) in corporation tax over the past three years, that it had followed the law and its changes "did not reduce our tax payments in any country".

The German newspaper Sudendeutsch Zeitung gave the New York Times and the International Consortium of Investigative Journalists access to the "Paradise Papers," which are secret files that detail alleged corporate strategies of clients of the Appleby Law Firm, based in Bermuda, that specializes in tax shelter schemes.

Instead of paying Irish corporation tax of 12.5%, or the USA rate of 35%, its foreign tax payments rarely amounted to more than 5 % of its foreign profits - and dipped below 2% in some years. The company has resisted bringing the money back to the USA because of the massive tax bill it would face.

Apple has continued to avoid the heavier taxes that some countries would like to exact by moving parts of its company to Jersey, the Paradise Papers have revealed.

A trove of documents known as the Paradise Papers have reportedly shed light on Apple's search for a new place to store the huge sums, after more than two decades of benefiting from artificially low taxes in Ireland.

The Paradise Papers disclosures come as President Trump's administration seeks to overhaul the USA federal tax code.

An Apple spokesman said the company hadn't engaged in any wrongdoing.

"Apple pays tax at Ireland's statutory 12.5 per cent", Apple said in a statement on Monday night in response to global coverage of its tax affairs in this and other media outlets.

Last year, the European Commission ordered Ireland to collect back taxes of up to $14.5bn from Apple, having previously ruled that the firm's tax deals in the country constitute "illegal state aid".

Despite being invited to do so, the corporation did not respond to speculation that Apple Operations Europe, which is now tax-resident in Ireland, may have spent tens of billions of euro, and possibly well in excess of €100 billion, on intellectual property which it brought from Apple subsidiaries now based in zero-taxed Jersey. We do not depend on tax gimmicks.

It alleges that Apple lawyers sent a questionnaire to the offshore finance firm Appleby, seeking to discover what tax havens like the British Virgin Islands, Bermuda, the Cayman Islands, Mauritius, the Isle of Man, Jersey and Guernsey could do for Apple.

Apple revamped its business empire to take advantage of tax loopholes on the European island after a crackdown on Ireland's loose rules began in 2013, the documents reveal. In 2014, Apple paid a tax rate of 0.005 percent.