Feeds

back to article Apple dodged all UK corporation tax in 2012

Apple didn't pay any corporation tax in the UK last year, according to its latest filings in the country, adding to controversy at home about its imaginative tax planning. The fruity firm's main British subsidiaries Apple (UK), Apple Europe and Apple Retail UK reported pre-tax profits between them of £68m in the year to …

COMMENTS

This topic is closed for new posts.

Page:

Have heard that....

They have a very good iccountant

10
0
Silver badge
Meh

They're probably just

holding the Tax form wrong.

18
1

Justification

They're just avoiding double taxation. Any profits that don't get taxed by the UK, go the shareholders as dividends and get taxed again.

5
33
Stop

Re: Justification

Errr..... No.

The money just seems to get hoarded. Pretty sure the shareholders have already been asking why the hell they aren't getting a slice of the action when the company is sitting on MASSES of cash.

23
2
WTF?

Re: Justification

Let's see - I get taxed at income, I get taxed when I spend money (and when I buy fuel, I get taxed on the tax I pay - yes, to add insult to injury the government charge VAT on fuel duty...)

So to say that companies should not be taxed twice, when citizens are taxed every which way possible...

38
3
Silver badge

Re: Justification

It is a lot easier to push around the common person and small business that fight with a global company with billions in cash on hand and swarms of lawyers. Governments are generally cowards and are afraid to pick a fight with a strong entity, they prefer to prey on the weak.

10
1

Re: Justification

So your answer to getting taxed a lot is to make sure others get taxed a lot too?

1
14
FAIL

Re: Justification

Sure Dave, then don't tax me either. Cause I'll pay the tax when I buy stuff, using my tax free income.

Dave, are you that stupid, or are you just hoping that we're that stupid?

6
0
FAIL

Re: Justification

"So your answer to getting taxed a lot is to make sure others get taxed a lot too?"

So your answer to "why are they paying no taxes" is, "but you're paying their taxes"?

Tax is like manure Dave, you need to spread it out.

6
0
Silver badge
FAIL

Re: Justification

No double taxation. Dividends come with a tax credit note so that the shareholder isn't taxed twice.

1
0

Re: Justification

That depends on the origin of the dividend. If a UK taxpayer buys shares in Apple traded outside of their country, they will be hit with double tax on any dividends. The tax credit usually doesn't apply to foreign dividends.

0
0
Anonymous Coward

Re: Justification

They are paying a stack of tax in the US and either what they have done is legal or illegal - I suspect legal. Everyone would like to think they pay more tax here in the UK but then they are a US company and the US and shareholders would get less.

I wonder how much EE or Three or Google or Samsung pay in the UK? If anything it's the rules that are wrong that allow this.

0
7
Anonymous Coward

Re: Justification

"citizens are taxed every which way possible". Yup.

And corporation tax is just another tax on citizens - one way or another, the money to pay it comes from the customers and/or the shareholders. At least you can see the taxes you pay personally.

Corporation tax is a nice one for governments as it's easier to hide how much the citizens are really paying. But it seems they've overdone the opaqueness and now the companies are using it to their advantage. I struggle not to laugh

4
2

@david Hicks Re: Justification

The money just seems to get hoarded. Pretty sure the shareholders have already been asking why the hell they aren't getting a slice of the action when the company is sitting on MASSES of cash.

It gets stashed to the point of it being less expensive to fund a dividend through debt, as Apple have done, than it is to repatriate their own money for that same purpose.

1
0
Anonymous Coward

Re: Justification

"Dave, are you that stupid, or are you just hoping that we're that stupid?"

Evidently Dave, and politicians of any persuasion, hope we are stupid - and by the look of things their hopes are being rewarded. Over and over and over again.

Despite :

1. Expense fiddling MPs

2. Out of control banks, bankers and regulators

3. Unacceptable press practices

4. Multinationals paying almost zero tax

5. MPs accepting unacceptable pay rises while all else suffers

6. Putting a 'towel folder' in charge of the economy

7. Eroding people's online privacy

9. No vision or policies that can't show results before the next election

The list goes on.

And yet, we as a people do nothing about it. Except whinge a bit on forums like this and then promptly go about our normal daily business attempting to scrape enough together to pay for the essentials which the politicians that we voted in made so expensive through their incompetent, arrogant and greedy management of the country. And then every four years, we vote in another bunch of experience-less, privileged public school boys come career politicians to carry on fucking up the country. After doing that they write a book about how sincere their intentions were and why the awful state of the country was all the other side's fault, retire in relative luxury and receive a peerage. All parties included.

Not saying I'm any different - but it seems if they brought back slavery we would all shout and scream about it for ten minutes - and then go back to watching the next episode of Big Brother.

2
0
Anonymous Coward

Re: Justification

"one way or another, the money to pay it comes from the customer"

No it doesn't. Apple and other corporations make huge profits. They don't need to charge customers more to cover their tax bill, their profits will cover it.

If they could charge customers more, they would. If charging customers more results in reduced sales they won't. Whether that is due to corporation tax or due to them putting their prices up.

In a market of supply and demand whether the goods are luxuries, there is a level of price constraint. An excuse of "VAT" has gone up might be tolerable and will be across the board. An excuse of "we've had to start paying some corporation tax for once" will not wash.

1
0
Ru

Re: Justification

Sure Dave, then don't tax me either. Cause I'll pay the tax when I buy stuff, using my tax free income.

Some jurisdictions do exactly that... Bermuda springs to mind. Of course, they cheat by having large import duties, and because they are a little island pretty much everything has to be imported so no-one is really any better off.

0
0
jai
Silver badge

"revamp tax rules to close the loopholes"

Why don't they just close the loopholes? It's all very well naming and shaming, but if the loopholes are there, corporations and wealthy individuals are going to keep on using them.

Or would that just involve a lot of work and time and money in order to close the loopholes and save more money?

OR is it that the politicians all use these loopholes themselves and are still smarting over the battering they got over tax evasion, multiple homes and expenses claims fraud that they'd rather just decry the evilness of big corporations and hope we forget about their past wrongs?

16
0

Re: "revamp tax rules to close the loopholes"

Complex tax code favors those with the resource to exploit them. Just because you think you're taxing "THE MAN" doesn't mean you're doing squat.

5
0

Re: "revamp tax rules to close the loopholes"

It's hard to define some of the loopholes, I think that's the issue. To steal (and butcher) someone else's analogy -

I own a banana shop, BananaCo Ltd. I make a profit buying bananas from country A and selling in high-ish tax country B, paying 20% of my profit in corp tax.

So I open BananaCo Holdings International (BHI) in low-tax country C and (on paper) have BananaCo Ltd buy all the bananas from there at a markup, keeping the profit in country C and paying less tax. There's still a profit in country B so each year BHI makes a charge to BananaCo Ltd for "brand services" and that swallows up the last of the profit and all tax liability.

Now, so far this has all been a game to avoid taxes and it's pretty obvious that's the case. But what if you have BananaCo GMBH in Germany and BananaCo SARL in France and BHI actually does do the sourcing for bananas from country A? And what if BHI does actually run (or at least finance) trans-national advertising campaigns and therefore does actually legitimately provide "Brand Services" to the various country-level companies?

Suddenly it gets very hard to draw the line as to exactly where the tax avoidance kicks in, what's a legitimate expense, what's just profit transfer and what exactly the taxman ought to be assessing.

It's clear that when the likes of Apple pay zero tax in the UK there is something wrong, but I don't get the impression this is very easy to fix. One way that's mooted is to try and have country C push up its tax rate to the same sorts of levels as country B. But why would they do that? They can have a tiny share of a huge amount, or they can have nothing (the companies wouldn't be there).

21
2

Re: "revamp tax rules to close the loopholes"

The governments who are lambasting the large firms for "exploiting loopholes" in tax law to their advantage don't want to change the law because the repercussions are difficult to foresee accurately. If they try and make the changes revenue neutral, or even favour the govt a little bit so some new tax money comes in, there could be a rebalancing in the market that actually makes the govt tax revenue position worse.

So rather than try and fix the problem (and remember, the govt created the problem in the first place by implementing the exceptions that are now being exploited), they try to shift the blame to the companies.

The sooner the electorate stop buying the male bovine offal shovelled out of the "Public Accounts Committee" or the US equivalent the sooner the problem can be fixed as the politicians suddenly realise their re-election may depend on it.

5
3

Why don't they just close the loopholes?

because it's not that simple. If it was, there wouldn't be any.

Different countries treat the same transaction differently. For example, in the US if a corporation has paid tax in prior years and makes a tax loss this year, it can 'carry back' the loss and get a tax refund from the IRS. This is entirely fair if your idea of what is 'fair' is the simplistic notion that companies should only be taxed on their profits. If you make £100 in profit this year and pay £27 in tax, but in the following year you make a loss of £101 then you should be entitled to a full refund of the £27 because you haven't made a 'profit' - you've made a £1 loss.

The illustration is a simple one but it shows just how ridiculous the concept of a 'fair share' is.

4
0
Silver badge
Flame

Re: Why don't they just close the loopholes?

So me as a lowly PAYE employee makes £24000 this financial year and pays tax on it, then next financial year when I spend most of it lying in hospital/home being seriously ill I'm entitled to a refund....

Like fek I am

A corp that makes £1000 profit in one year should damn well pay your 27% tax on it

If I cant evade the tax, if the small business I work for cant evade the tax.. why the damn hell should a big corp be able to?

9
3
Anonymous Coward

Re: Why don't they just close the loopholes?

One reason is because what does the corporation get for paying the tx ? Health Care,m nope, corporations don't use the NHS, Education, nope, and so on. The Employees use those things and pay for them (or some of them do), shareholders also pay taxes.

The only reason to tax companies is because you can, you can fool the sheeple into thinking that it's not them being taxed it's Apple, or Google, or whoever, and most sheeple are too stupid to realize that they do pay that tax, by paying for the products or services of that company, or as an employee by lower wages, or as a shareholder by lower returns.

And who is foolish enough to even try to mention "austerity", the UK government is spending more each year, and face it, austerity DOES NOT equal slowing down the rate of growth. Greedy bastards.

1
4

Re: "revamp tax rules to close the loopholes"

I rather fear that budget cuts to HMRC have severely limited it's ability to investigate these things properly. I'm sure there are government departments that can stand to lose some weight, but underfunding your tax collectors is moronic

3
2
FAIL

Re: Why don't they just close the loopholes?

One reason is because what does the corporation get for paying the tx ?

Roads, healthy, educated employees, you know, a society to operate and profit in.

"The only reason to tax companies is because you can, you can fool the sheeple into thinking that it's not them being taxed it's Apple, or Google, or whoever, and most sheeple are too stupid to realize that they do pay that tax:"

Errr, no. The people don't pay the tax. The company does, or rather it should. This is just another libertarian canard. At the moment the money just disappears out of the country, tax would keep some of it in country. An effective tax would also allow smaller, local (to the country) companies to compete with the multinationals and keep even more of the money we spend circulating in our own economy rather than being spirited away.

6
1
Stop

Re: Why don't they just close the loopholes?

"One reason is because what does the corporation get for paying the tx ? Health Care,m nope, corporations don't use the NHS, Education, nope, and so on. "

This is not correct. Corporations do benefit from health care. Healthcare provides them with healthy workers who generate healthy profits. Healthcare also provides them with healthy customers who earn more money and can afford to pay for their products. The same is true of education, law enforcement, infrastructure.

Wealthy countries lead to wealthy corporations and wealthy corporations should lead to wealthy countries in a virtuous circle.

The problem is that not paying your fair share of tax penalises everyone else but you gain. It is parasitism. In my opinion, the way forward is to load cost onto companies who do not pay sufficient tax with an operating costs to make good the tax losses. Base it on turnover and charge fairly (from the point of view of those who compete with tax avoiding corporations) so that corporations cannot avoid the 'costs of doing business even though they avoid paying tax'.

5
0

Re: Why don't they just close the loopholes?

"In my opinion, the way forward is to load cost onto companies who do not pay sufficient tax with an operating costs to make good the tax losses."

Like some form of Value Added Tax added to the cost at retail, even better, the retailer can collect it on behalf of HMRC & HMRC can give them a percentage cut for their troubles ;)

0
0
Stop

Re: "revamp tax rules to close the loopholes"

If only it were that simple.

Legislators are only able to act unilaterally. Mega Global Incs cherry pick national differences and effectively lie about the value of goods and services along their own supply chain.

The holes don't really exist until they are dug out by the teams of accountants used by the tax dodgers.

Apple tell the Irish taxman that many of their Irish subsidiaries have no employees and conduct all of their business outside of Ireland, any profits, under Irish law, are not taxable. It follows that Apple employees elsewhere must be conducting the work on behalf of these subsidiaries. Those employees are effectively loss makers for their true employers, which is great for Apple because it helps them to artificially reduce profits (and taxes) there as well.

It is difficult to see what any single country can do. More complex tax laws will penalise smaller firms that will have to pay more in accounting fees and merely result in the large tax dodgers just paying their own accounts more to find new loopholes.

If tax authorities were allowed to audit the whole supply chain across national boundaries things might be different but they ain't .

0
0
Anonymous Coward

Re: Why don't they just close the loopholes?

"A corp that makes £1000 profit in one year should damn well pay your 27% tax on it"

That is the point - they do not make the profit - they siphon it off in licensing fees, other (legal) deductions, loans from one group company to another to ensure the costs lie in high tax jurisdictions (to wipe out any profit) and the profits end up in tax havens / low(er) tax jurisdictions.

If you were a multinational would you setup shop in an area that charged 10% tax or 27% tax if it were all part of the lovely open EU and you could freely ship product within that area?

0
0

Re: Why don't they just close the loopholes?

@AC: "what does the corporation get for paying the tx ? Health Care, nope, corporations don't use the NHS, Education, nope, and so on."

So who paid to educate their workforce and to provide the infrastructure to enable them to get to work? Multinational corporations using these tax avoidance schemes are parasites.

0
1
Meh

Re: Why don't they just close the loopholes?

Such Corporations do actually benifit by exploiting their Uk employees with wages only livable on through subsidies from welfare, Nhs, education, they also benifit from using the infrastructure, the legal system (Apples main r&d!) which of course is all funded by taxation from you, me & small medium businesses.

So I do object to seeing my tax being sucked out of our economy,bolstering these corporations profits, giving them an unfair advantage over local competition & increasing the tax deficit.

0
1
Silver badge

"Legislators are only able to act unilaterally."

Except, when a large number of EU legislators got together and acted multilaterally on this matter, they created something called "The Maastricht Agreement", which states that a company doing business in the EU need only pay tax in one EU jurisdiction. This is the main "loophole" the tax campaigners have been complaining about, and it's not a loophole at all: it's the very intent of the law, not a sneaky way round it. I can't help but notice considerable overlap between people who object to companies using the Maastricht Agreement now and people who objected to anyone suggesting that John Major shouldn't sign it at the time.

0
1

Government's Job

The Government wrote the laws and rules for these taxation regulations. Many of these International Corporations have the tax rules originally written in the various treaties between each of these Nations. So if the UK Government doesn't like the tax payments by International Corporations, they only need to change those laws themselves!

The media needs to stop making this look like a Corporate "DODGE JOB", and make it a Government FAILURE TO MANAGE job.

7
5
Bronze badge

I have a bit of finger dyslexia when typing the word "accounts" and were it not for auto-correct some of the documentation I write would have to go out after the 9 o'clock watershed.

But perhaps I had it right all along....

7
0
Anonymous Coward

Will this get the same coverage as Google?

I somehow doubt it, as all the media love Apple.

3
1

Actually not!

"They're just avoiding double taxation."

They very cleverly just issued shares to pay the dividend with (and a lot more besides)! This meant they didnt have to bring the money on shore and pay tax on it. So they have actually evaded tax entirely!

With regard to the "Government's Job", as a qualified tax specialist can easily earn twice as much for the private sector guess where all the brains are. Also, these big companies will easily deploy ten times the number of people to avoid tax as our constantly cut back Civil Service will deploy to hunt it. It's amazing they get anything through the doors these days and with the on going cuts in Civil Service payroll you can expect even less in the future. The bottom line is as long as you have politicians who's next career step is to become directors you aren't going to get legislation to put the thumb screws on corporate tax avoidance.

I mention payroll deplberately as the job cuts lead to an increase in hugely generous redundancy and pension payments to go to non-productive ex employees. Ahhh, but that's a different budget it doesnt matter that it's the same eventual tax fund... That we're not collecting...

2
1

Re: Actually not!

Whether it's a cash dividend or a share dividend, it will eventually be taxed. The only difference is with share dividends you will be taxed after you dispose of the shares at a base value of $0 per share.

1
0
Megaphone

Company's like Apple should be Made to pay the FULL TAX in the country where the profit was made. (BEFORE THEY MOVE IT OFF SHORE)

Then if the company chooses to move profit to another country the country it moves the profit to has the choice to tax the incoming transferred profit

5
2
Facepalm

"Company's like Apple should be Made to pay the FULL TAX in the country where the profit was made. (BEFORE THEY MOVE IT OFF SHORE)"

Yeah, about that.

How do you decide how much profit is made? What is the correct <FULL TAX> amount is?

The issue is this. Profit = sales-price (ex sales tax) - cost of sale (the wholesale/build cost of the idevice + overheads).

Now the country (UK in this case) does in fact grab the sales tax. The consumer is paying of course, but Apple are collecting it and handing it over to the government. No problems there - hence governments moving increasingly to load up on sale taxes despite customers increasing ability to buy overseas making an ever increasing loophole.

The real problem with your plan is that the cost of sale is whatever Apple claim it is. So if the overheads of rent, power and wages is £1 per iDevice and the theoretical ex-VAT price of device happened to be £100, then all Apple have to do is pay £99 per iDevice to their Irish supplier. Result no profit in the UK, but the £99 goes back to pay the actual £10 build price of the device in a low taxation country. In actual fact Apple and other companies tend to bury the costs not in hardware costs but in brand or IP payments which are relatively intangible.

To challenge the profit being claimed, you would have to have a massive governments department to determine if every transaction claimed as a business cost was valid - and given that the transactions could be anything across any number of countries, this would be a near impossible task. How would the the tax man determine if the Apple brand (i.e. a payment made from Apple UK to Apple mothership) is worth £1 or £1 billion?

"Then if the company chooses to move profit to another country the country it moves the profit to has the choice to tax the incoming transferred profit"

Which means double taxation. And again 'moving profit' - how do you define that when you see a $1 coming into a company in Country A, is it profit, refund, payment or just another transaction?

1
0
Pint

25% duty on branding costs

cross borders used to offset a reduction in beer duty!

2
0

International Tax Accounting vs Global Climate Change Models

Isn't it amazing what one can do with computers these days? There may be lies, damned lies, and statistics, but they pale in comparison to those two.

1
1
FAIL

Why don't we just...

Declare that:

using anything *deemed* to be a tax avoidance measure, such as (but not limited to):

> artificially induced debts

> paying over the odds for goods from subsidiaries located in other jurisdictions

> paying over-the-top license fees to subsidiaries located in other jurisdictions

is illegal and will:

a) result in the CFO going to prison if the evaded liability is >£250,000, and

b) will result in "tax avoidance" measures not only being treated as though they're not there, but as though they had the *opposite* effect when calculating tax owed

Corporations can protect themselves by being completely honest, open, and up-front with HMRC about any schemes which might look even slightly dodgy, and HMRC can audit them up-front to determine what the effect on the tax liability is, and whether or not it's a legitimate transaction, or if it's designed to avoid paying tax.

That way, anything that isn't declared up front is entirely subjective, and HMRC can go around nobbling corporations left, right, and centre.

6
1
Anonymous Coward

Should have read

Apple dodged all UK corporation tax in 2012 LEGALLY.

I'm not a big Apple fan by any means, but you cannot blame them for following the law.

5
5
Bronze badge

Re: Should have read

Now when the suckers keep buying no matter what!

1
0
Stop

Re: Should have read

>> you cannot blame them for following the law.

Of course you can. If someone was dumping raw sewage in your water supply, and that were within the law, you would probably want the law changed but you'd also want to punch the bastard that was putting sh*t in your drinking water.

1
0
Anonymous Coward

Re: Should have read

Before you add that anti-Apple bias perhaps consider - how much UK tax did the maker of your particular phone pay, how about your mobile network, how about the company who made your TV or ??

2
0
Silver badge
Stop

Re: Should have read

"Of course you can. If someone was dumping raw sewage in your water supply, and that were within the law, you would probably want the law changed but you'd also want to punch the bastard that was putting sh*t in your drinking water."

Until you learn the source of the pollution is in an entirely different country who could care less about the pollution since in their country that's a designated dump.

That's a nutshell description of the problem. Multinationals are pitting countries against each other and using the antagonism to their advantage.

0
0

Re: Should have read

"Until you learn the source of the pollution is in an entirely different country who could care less about the pollution since in their country that's a designated dump."

That's really no defence. Even if it's a designated dump in another country, the folks doing the dumping still shoulder the blame for their actions.

If the US were to designate the Colorado River just before it crosses the border to Mexico as a legitimate dumping ground, and ShitCo starts dumping there, the Mexicans would be pissed off. They would be perfectly right to be pissed off at BOTH the US government for allowing the behaviour, AND the people working at ShitCo itself for knowingly polluting their water supply.

Just because the government allows something does not mean it's right, nor that the people doing it are somehow blameless because they were within the law, regardless of whose law or where.

0
0
Bronze badge

Obviously they are non taxed by design in Californicaton

Whilst they consider us all a bit green, those still not blind sight might just see red.

0
0

Page:

This topic is closed for new posts.