Who did Apple LIE TO: Australia or America?

Re: Shock Horror!

Give them a break. They can't just tell the same story everywhere.

Re: Shock Horror!

- Local responsible : "no, I don't set prices, the mothership set it."

- Global responsible : "No, I don't set prices, it's locally set."

Actually, it looks like the usual "Pass the blame" corporate game...

Re: Localized Market Rate

It's not the pricing - it's what Apple singapore (or Apple Ireland) does.

They claimed to the US that Apple Singapore is a real company that markets and sells apple computers, buys Apple products at wholesale from the US, runs it's own operations and makes it's own profits and so all the profits made by Apple Singapore don't go back to the US and don't get taxed.

If in fact Apple Singapore is simply a brass plaque on a wall somewhere and Apple US make all the decisions and sales it' s a little harder to claim that all the profit should be taxed in Singapore or Ireland

Re: Localized Market Rate

Yes. I've long believed that marketing, PR, brand equity etc. all act against the free market because they leverage the irrational responses of the market participants. (A truly free market must rest on the pillar of rational consumption, which would require a ban on all advertising, and no business is going to like that).

However, they did lie

It doesnt really matter how important a detail it is, but whether through incompetence or malice, they have given two governmental legal inquiries contradictory answers.

Worse, in both cases they gave an answer likely to be accepted by the questioner as reducing their liability, which implies the truth is probably neither of them.

Re: Both right?

This isn't (really) about high street price, it's transfer price.

The Aus subsidiary doesn't make widgets, it buys them from another company in the group for an inter-company "transfer price", and then sells the widgets at a street price.

The profits are then worked out by "street minus transfer". By adjusting both transfer price and street price, a multinational company can move the bulk of the taxable profit into the country of their choice while still having huge margins.

If the transfer price is unreasonably high, the taxable profit will be unreasonably low and taxes have probably been evaded. If they are reasonable, then taxes are merely avoided.

This is what Starbucks did in the UK with the beans - they had to buy them from a foreign Starbucks subsidiary at a surprisingly high price. (They weren't actually convicted of anything though)

Re: See the case of the IRS and Al Capone.

The reason the IRS got Al Capone, is that with the IRS unlike the courts, you usually have to prove your innocence.

That's not as true for multi-nationals. Because the the subcorps are legal entities existing in other jurisdictions, until such time as they transfer something form one place to another there is no record which is required to be reported to the IRS. So there is some sense in which the IRS has to prove that there should have been a transfer which should have generated the paperwork. So for them the IRS looks a bit more like the court system than it does to your average citizen.

Over cooking the tax avoidance schemes

Indeed, governments worldwide have been really slow to react to how big global corporations are running rings round their tax departments. Not good at all.

However, one thing that politicians are good at is getting angry. The more votes there are in getting angry the angrier they will get. And the angrier they get the more reactionary and swingeing their acts will become. And they'll quite happily stoke up the public mood even further so that they can step up their own anger-act.

At the moment there seems to be a global wave of consumer annoyance at large firms paying no real tax. Politicians are pretty sensitive to this sort of public mood, and sooner or later they're going to start getting really angry on our behalf and start passing penal tax laws. Then all it takes is for a few of the world's monetary politicians to have a quiet chat about coordinated action at the next G8/22/xx and a bit of dutch courage, and then the money could find itself with no place left to hide.

The big corporations are in a bit of a bind. They're more or less obliged by their shareholders to pay as little tax as is deviously possible. However, by tweaking the political tiger's tail like this (especially at the moment) they're risking provoking a global political backlash which could turn out to be veeeeery expensive indeed.

However, if they were to stop what they're doing that would only highlight the fact that they've been taking the piss all this time. But it's probably better to stop doing it before the politicians finally get their arses in gear. Hell, it might even improve sales, so long as it doesn't look too cynical.

Thing is if there is a global tax grab against these major corporations that are hoarding cash out of site one has to stop and consider who loses out. Answer? The shareholders. And they, lest we forget, are quite often our pension plans...

The thing is that cash locked up abroad is of no actual use to the shareholders at all who, in the absence of a decent dividend, have to make do with rising share prices whilst hoping the bubble doesn't burst. And if the money was repatriated, and tax paid, that lessens the tax burden on the individual right now.

Of course, all the above could be just naïve claptrap, but that doesn't mean to say that the general public won't be thinking along similar lines. People looking at their small and decreasing pay packets will sooner or later start wondering why they're pouring money into foreign firms that don't otherwise contribute to their country.