I was anti-Apple, until.....

[wolster]

Oh dear.....

 

US tech giant Apple has shifted an estimated $8.9 billion in untaxed profits from its Australian operations to a tax haven structure in Ireland in the last decade, an investigation by The Australian Financial Review has found.

Last year Apple reported pretax earnings in Australia of only $88.5 million after it sent an estimated $2 billion of income from its Australian sales to Ireland via Singapore, where Apple negotiated a secret tax deal in 2009.

Read more: http://www.smh.com.au/business/tax-deal-how-apple-shifts-its-billions-out-of-australia-20140306-347x9.html#ixzz2v7uqInp0

[Zaphod Beeblebrox]

Yep, I read that too, wolster.

 

Apple are scum again (like most multi-nationals).

 

Doesn't matter. Abbott won't pursue the big boys for their fair share of tax. He'll screw the rest of us. And, like sheep, we'll keep voting for him.

[wolster]

Zaph, it will be interesting to see just what evolves from this. I don't think any government can ignore these figures, especially when so stretched, budget wise. Even if it needs a tweak to the taxation laws something must be done. Like you, I will await the response.

[davewantsmoore]

Apple are scum again (like most multi-nationals)

 

I agree... but I think the blame lies with 'us' not with 'them'.

[sir sanders zingmore]

I agree... but I think the blame lies with 'us' not with 'them'.

I'm not sure I agree they are "scum". If, as I suspect, they have minimised tax legally why are we annoyed or or even surprised? Why should they behave differently?

As you say, if we don't like it it's our own fault. It's our tax laws that we should change.

[Zaphod Beeblebrox]

It's actually far more complicated than that. The laws pertaining to taxation must change on a planet-wide basis.

[davewantsmoore]

I'm not sure I agree they are "scum"

 

Sure, ok it's a bit harsh. Heh.

 

 

 they have minimised tax legally why are we annoyed or or even surprised? Why should they behave differently?

 

Yes, that's where I'm coming from.  In the jungle the lion eats the deer for lunch.

[TP1]

The issue is not so much what taxes Australia misses out on but what the USA does. Australia has very strict transfer pricing rules for taxation purposes and Apple may well have an agreement in place with he Australian Taxation office. Apple imports all their gear sold in Australia for a price from a related entity (transfer price reviewed by taxation office to make sure it is not inflated to reduce tax). The profits from retailing are taxed here and the the cost of the equipment is paid to related entities in a tax haven country and don't necessarily represent profits.

Australian owned companies do this as well as most multinationals. Singapore has been specifically targeting large companies with bases in Australia to shift part of their operations over there in exchange for a negotiated tax break. Singapore has been doing this under the noses of the Australian Government for the past several years. I'm sure it could be stopped easy enough because Australia allows the Singapore Air Force to based here and is relied upon heavily for their national security.

The reason the Singaporeans have been successful at this is that their Government will do whatever it takes to attract businessses away from Australia and elsewhere while Australia does not. In fact with the Carbon tax, mining tax etc it is becoming an easier sell.

So, how many people would stand behind an Aussie government if they gave a range of tax incentives ( beyond those currently available) to keep and attract more companies to Australia like Singapore does? Assume it will be done in a manner that there will be a net gain to the economy through employment etc ( which is the Singapore model) This would also mean concessions on the carbon tax etc and less Government red tape.

[TP1]

Yep, I read that too, wolster.

 

Apple are scum again (like most multi-nationals).

 

Doesn't matter. Abbott won't pursue the big boys for their fair share of tax. He'll screw the rest of us. And, like sheep, we'll keep voting for him.

Zaph, this is in my area of expertise and I can assure you that while the Libs may have different tax policies which we may disagree with, they are in no way any more lenient on tax avoidance. In fact, a very tough treasurer in this regard in recent years was Peter Costello. He had ways of rendering tax wins by business through the courts impotent . He used " innovative" legislation to make sure changes applied retrospectively without it being technically " retrospective legislation" This stuff hardly ever hits the mainstream press because it only affects business.

[Dustin]

It's actually far more complicated than that. The laws pertaining to taxation must change on a planet-wide basis.

 

Yes, that's apparently the key.

Was listening to some 'expert' from the US on the radio today. It appears the US Government are perfectly aware that Apple (and it sure isn't just Apple) utilise these paper companies to transfer money around the globe, much of which becomes untouchable by any government.

The US Government has apparently been persuaded that this regime helps Apple et al maintain global competitiveness and thus pay their US taxes. The tax due to Australia within Australia doesn't concern them.

Free trade agreement anyone?

[Orpheus]

It's not the features (bling, really) of Apple products that appeal to me. The problem I have with Apple, is the way they:

* Don't allow battery replacements for many of their products.

* Don't allow easy connection to other products.

* Force users into using cloud computing.

* Stick it to users for the Apple Store products.

The Apple laptop I have now is my first Apple computer, and it's easily the most enjoyable computer I've had to use. Attractive, robust, very stable operations, and no real compatability issues.

It is also more intuitive.

Any compatability problems are because the majority of products are still designed for PCs. This is becoming less of a problem as Macs become more prevalent.

I don't use Cloud computing, but have no problems with it being available and (like most Mac things) easy to use.

Apple recognised that most of us are not computer software experts, that how things look and feel is part of the experience of using a computer, and that we would use much more of a computer's capability if software was designed with the average user in mind.

There are arguments against Job's controlling approach, of course, but it results in a very high level of satisfaction amongst Mac users.

[colinm1]

apple don't pay tax in aussie or Ireland or the usa,from any sales in Australia,or atleast that is what a person said on the radio yesterday,some reporter from the fin review I think

[TP1]

Apple does pay tax in Australia and in other countries - the article in the fin review was referring to an analysis by the fin review suggesting it could be more. It doesn't mean much because Apple and other big companies usually go to great lengths to ensure they comply with all local laws to give them certainty in their operations.

I am very curious as to why the article focussed only on Apple if the writer really cared about the integrity of the Australian taxation system. You can look at every multinationals accounts and find something to write about

Edited March 6, 2014 by Tasso

[sir sanders zingmore]

Can someone explain to me what apple has done wrong?

[aechmea]

Nothing.

 

And as Kerry Packer famously said ...

 

I've already given you the answer on this subject, I have told you that I pay whatever tax I am required to pay under the law, not a penny more, not a penny less, and the suggestion that I am trying to evade tax, which is what you're putting forward, I find highly offensive and I don't intend to cooperate with you in the blackening of my character.

[Orpheus]

Nothing wrong, at least from a legal perspective. But it would be better if these clever schemes were closed off, and the tax companies paid reflected what they earned in the country in which they earned it.

[davewantsmoore]

Can someone explain to me what apple has done wrong?

 

Minimised the amount of tax they pay to Australia as much as possible, by offshoring components of their COGS.     Excuse if that's an over-simplified summary.

 

 

<not a tax law expert, *ahem* obviously> ....   It seems to me, we have laws in Oz which apply to me, that say generically that I am not allowed to do anything for the sole purpose of minimising my tax liability.

 

Part IVA of the Income Tax Assessment Act (ITAA) 1936.

1. Did you obtain a tax benefit from your activity - a benefit that would not have been available if you had not entered into it?
2. Would it be concluded that you entered into the scheme for the sole or dominant purpose of obtaining a tax benefit?

 

... but that these laws do not apply to corporations!?  (or they are not enforced?... or?)

Edited March 7, 2014 by davewantsmoore

[davewantsmoore]

Nothing wrong, at least from a legal perspective.

 

Perhaps?!

[sir sanders zingmore]

Minimised the amount of tax they pay to Australia as much as possible, by offshoring components of their COGS. Excuse if that's an over-simplified summary.

What's wrong with that?

[wolster]

As I understand it (using fictitious figures), Apple gets an iPhone made in China for $50.

They send it to Ireland, where they negotiated a good tax deal in 2009.

Their Irish subsidiary then sells the iPhone to Apple Australia for $500, thereby capturing most of the taxable profit in that country.

Apple Australia sells the phone to you for $600 and, after costs, pay Australian tax on the modest profit.

[sir sanders zingmore]

As I understand it (using fictitious figures), Apple gets an iPhone made in China for $50.

They send it to Ireland, where they negotiated a good tax deal in 2009.

Their Irish subsidiary then sells the iPhone to Apple Australia for $500, thereby capturing most of the taxable profit in that country.

Apple Australia sells the phone to you for $600 and, after costs, pay Australian tax on the modest profit.

 

does that fall foul of Australia's transfer pricing laws?

[acg]

Sure, ok it's a bit harsh. Heh.

 

 

 

Yes, that's where I'm coming from.  In the jungle the lion eats the deer for lunch.

 

Yeah, but the Lion shits under a tree and takes a piss on the plains that makes the grass grow that feeds the deer.  This Apple lion is eating the deer, but taking his faeces to Ireland...that is the problem.

Edited March 7, 2014 by acg

[davewantsmoore]

What's wrong with that?

 

Potentially nothing, depending on the exact letter of the law / interpretation.

 

However it would be illegal for you and I, as we are not allowed to enter into arrangements for the sole purpose of tax minimisation.

[sir sanders zingmore]

Potentially nothing, depending on the exact letter of the law / interpretation.

 

However it would be illegal for you and I, as we are not allowed to enter into arrangements for the sole purpose of tax minimisation.

 

It's irrelevant whether or not its illegal for you or I.

 

If you were an Apple shareholder, would you expect them to pay more tax than they are legally obliged to pay?

[TP1]

Dear me. If people just want to vent at Apple because they don't like them that is one thing and I won't bother any further. Perhaps another hate thread, which are becoming way to common on SNA should be started, But if they are not, it's worth understanding a couple of things. The allegations are not coming from the tax Authorities or the Australian Government. The Tax office has been very active in the area of transfer pricing . It has considerable power and has worked closely with major multinationals and foreign tax regimes to ensure that independently sustainable transfer prices are used. However, any agreements between the ATO, Companies, and other countries are bound by legal land contractual confidentiality - something that would be known to those pointing the finger.

The method used to accuse Apple of shirking tax responsibilities is seriously flawed and other indicators can be used to equally accuse any other company . The allegations are so vague , they seem to have another motive . For example, it is alleged that Apple should have declared more profit during periods that encompass the Global financial crisis and for several years before the IPhone was released. Apple has paid more tax in recent years due to market share and sales but the article implies that the same level of taxation should have been paid during the GFC and earlier. Not compelling at all , but let's not let the facts get in the way of anything.

Edited March 7, 2014 by Tasso