How Apple dodged billions in taxes

May 21, 2013 10:05

Apple, the top US computer and smart phone manufacturer, used a complex web of offshore entities to avoid billions in taxes, a Senate panel has alleged.

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 US 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 per cent in 2011 on $22 billion in earnings, according to the report.

The panel said that Apple exploited the gap between the two nations, the US and Ireland, through three of its subsidiaries the company claims are not tax resident in any nation, to avoid paying taxes.

"Exploiting the gap between the two nations' tax laws, Apple Operations International has not filed an income tax return in either country, or any other country, for the past five years. From 2009 to 2012, it reported income totalling $30 billion," the Senate panel said.

It alleged that Apple is taking advantage of weaknesses and loopholes in tax law and regulations to "disregard" offshore subsidiaries for tax purposes, shielding billions of dollars in income that could otherwise be taxable in the US.

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