Cook: Apple has 'no current plan' to pull profits out of Ireland Apple CEO Tim Cook has doubled down on his earlier defense of Cupertino's accounting practices in testimony before a US Senate subcommittee on Tuesday, describing the company as "America's largest corporate income taxpayer." "Apple complies fully with both the laws and spirit of the laws," Cook said in his prepared remarks, …
If it can get away with that. That's pretty much the only way they can their paws on those money.
Apple is doing what is in its Fiduciary Duty to legally minimize tax expenditure to the benefit of its shareholder. To do otherwise will invite shareholder lawsuit. Seriously, if Congress want that money back, simply lower the tax rate of repatriation profit down to something like 5% and see those money roll back. 5% of something is infinitely greater than 35% of nothing.
BigFire: "Apple is doing what is in its Fiduciary Duty to legally minimize tax expenditure to the benefit of its shareholder."
As much as I agree with your sentiment, it's not so. Apple is proving that if something can, then it will be abused by large corporations.
The sad thing is, that if Apple takes this hit, they are hit in a way they never wanted to be, they will become extremely sticky for other companies to consider. But if Apple dodges this, it proves that MegaCorp can get away with billion dollar abuses, and this will become very well known. Nobody wins now, and that is Apple's fault.
But if Apple dodges this, it proves that MegaCorp can get away with billion dollar abuses, and this will become very well known. Nobody wins now, and that is Apple's fault.
These laws were meant to be "abused": Governments must have spent millions of lawyer-hours globally to craft them so there is no unintended consequences!
Why the change then?
Conspiracy: The problem for Apple - and everyone else - is that industry is no longer the dominant economic power in the world, Finance is! The financial industry dictates the laws and how laws are to be enforced to governments, governments obey and look for some way of collecting the revenue for their new masters that will not upset the voters too much -> Apple & Co goes under the bus.
- or -
Business as Usual: The IRS favors the good olde Box Barrage. "Herding the sheep" into a defined legal setup, then unleash hellfire on top of them when the target density looks juicy enough. Happens every 2-5 years or so.
The legislature makes the laws but the judiciary interpret them.
"Three of Apple's subsidiaries, he added, 'sure seem to fit that description'." LMAO. "seem to" != "do" and, besides, it's up to the judiciary to determine if any laws have been broken, not the legislature.
Fiduciary Duty has nothing to do with limiting tax. Apple's duty is acting in the interests of investors of with the money gained by investors. Tax evasion (legal or otherwise) is simply the company bean counters trying to reduce what the company needs to pay out.
Part of the by product of avoiding taxes, may well be more profit for investors, but being profitable and providing ROI's still meets ones fiduciary duty.
If Apple's is deemed to be avoiding taxes and the government fines them or requires them to pay additional taxes would you than say Apple acted fiduciary with investor money?
That's 10 days paid leave/vacation. 'Holidays' is an entirely different type of Leave and not included in Vacation. Varies between 2 (private usually retail, especially fast food) and 10 (those living of the public largess, ie government employees/contractors). Usually different than medical/sick leave (preferential tax treatment I believe), although some companies consolidate paid and sick into "unified" leave, which usually starts at 15 days per year. Rate of increase in availability of leave varies. Some start increasing it in as little as three years and typically max increases within 12 years of continuous employment.
"of course the joke icon should have given it away..."
Oops, we're busted. And we go out of our way to prove we are willfully illiterate idiots instrad of freetards. We have our pride, and when that fails, there is psychosis.
Apple and Tim Cook have done nothing in the last 48 hours to convince me they deserve a hearing on a solution to this problem. They are dime-a-dozen gadget hucksters. If I want a gadget, I know where they are. If I want lectures on how brilliant they are, I've got a dime.
I was surprised when eu and uk us (indirectly via imf) bailed out the Irish without demanding an increase in their ct rate. This was so silly - why help the Irish when they use such a blatent (immoral in my opinion) scheme to suck profits and tax away from their neighbours where the profits were earned. This particularly affects uk - most of the mega corps which make large profits do this including google and microsoft.
Good news is eu seem to have learned their lesson - so refused to help cyprus without them taking a hit aswell - made me laugh rioting and expecting germany to pay for their leaders utter incompetance - lending to crazy greek projects, paying high interest rates etc.
I wonder if the apple cfo has factored in risk of Ireland confiscating their cash in another emergancy ??
Would be quite amusing!
> I was surprised when eu and uk us (indirectly via imf) bailed out the Irish without demanding
> an increase in their ct rate
They did demand Corporation Tax increases.
- http://www.dailyedge.ie/irelands-corporate-tax-rate-could-be-at-risk-from-german-demands-118575-Apr2011/
- http://www.irishliquidations.ie/news/2011/5/11/france-want-increase-in-irish-corporate-tax-rate.html
They were told where to go.
- http://www.independent.ie/business/irish/european-demands-for-hike-in-corporation-tax-unfair-taoiseach-26740586.html
- http://www.thejournal.ie/president-says-french-and-german-demands-over-corporation-tax-are-a-nonsense-128348-Apr2011/
As part of the carrot to approve the Lisbon Treaty the Irish People was given legally binding guarantees that we would not be forced to increase our Corporation Tax.
With corporation tax off the table, the main remaining issue was whether or not it was in the EU's interest for an EU eurozone country ( with the Euro as its currency ) to go bankrupt, and what effect that would have on the Euro.
Quote: "They were told where to go"
The Lisbon treaty has nothing to do with bailouts. Under the Lisbon treaty the Eu cannot demand anything in terms of day to day tax code operation and mechanics.
When a country comes with a hat in hand to Brussels it is an entirely different matter. It can demand anything (as the Cyprus debacle has shown).
So frankly, it could demand the dismemberment of the so called double dutch-Irish sandwich at the very least (shuffling money twice through Ireland and Holland with a detour to a Dutch overseas territory dropping the rate from the Irish 15% to effectively 0). It could and should have demanded an increase in the corporation rate too as the situation is _NOT_ covered by the legal guarantees of Lisbon. However, as Ireland was one of the first countries to go bust the Eu was not bold enough at the time (good lobbying by the likes of Apple and Google too). I would not be so sure that this will remain the case when Ireland will come for the next handout ('cause it will).
I know the Irish refused - but they were not exactly in a strong negotiating position - eu were stupid at that time to not call their bluff - they had no other options - Cyprus proved this - parliament refused terms initially - they ended up desperate and grovelling - result worse terms.
You cant expect corporations to pay tax based on ethics when all their competitors have a tax advantage - the real culprits are countries like Ireland - thats why its idiotic that we help them maintain this scheme which sucks revenue away from us.
The Irish people are quite passionate about our 12.5% corporation tax. It's almost hard-wired into our DNA, a sacred point that no politician who wants to be elected again is going to touch. No politician will down in history as the one who lost the 12.5% rate.
The EU/IMF might have had some luck ( if they tried; I'm not sure if they did) in having Ireland close the Double-Irish loophole, but when it comes to protecting our 12.5% corporation tax, we weren't bluffing.
Ireland is no more a culprit here than Asda are with their predatory 10% price promises. It's called competition, and is one of the fundamental pillars of healthy economics. Granting this loan wasn't some altruistic gesture on the British/EU's behalf. The British had to decide if they wanted to maintain the economic ties they share with Ireland ( and profit in the process by charging a rate 0.18% higher than their borrowing rate[1]), and as for France and Germany, Irelands falling would have had disastrous consequences for the Euro.
1: http://www.rte.ie/news/special-reports/2009/0512/117297-eulisbon/
yes your country could have gone bankrupt !
euro would have still fine
media does not understand money therefore perpetrates nonsense such as a tiny economy such as greece or ireland would be end of euro or uk having pound is better than euro both not true
money is just an accounting unit and a liquid iou
german backed ecb has more credibility than bank of england
euro good for business because reduces risk and friction
california nearly went bust there was no talk of us dollar dissapearing
tax rates not fair competition you had no corporations to tax before no you get 12.5 of profits earned mainly in uk
not earned in ireland all they do there is noody back office low value crappy jobs no r&d
uk would be better off cutting ties and stopping this scam
@gary27
It's a pity that when you got that PhD in economics, you didn't pick up a few grammar lessons along the way. A few well placed capital letters and full stops would make your post much clearer. I will however persevere to decipher some of the less subtle aspects of your post.
California and the dollar are very different situations. California is a single state within the United States of America. Ireland is a sovereign country with the right and responsibility to set our own tax rates. We've had the Euro for little over 10 years, 14 if you include the time between 1999 and 2002 when exchange rates between eurozone currencies were fixed. This recession is one of the first challenges it's ever faced. California has had the dollar since the formation of the United States, over 200 years ago. The dollar could be considered a little more established, and considerably more stable than the Euro.
How do you figure that "the profits are mainly earned in the UK"? Are you somehow of the impression that Google hired thousands of staff, and bought the tallest commercial building in Dublin to house them, just to have them twiddle their thumbs?
Ireland is an attractive location for multi-nationals for several reasons besides our corporation tax rate, including our combination of the English Language, the Euro, and superior education.
Irelands definition of tax residence is different from that of other countries. It's based on where the company is actually managed, as opposed to where it's registered. Surely this is a better definition of the tax residence of a company than based on some arbitrary choice of registration venues.
Good news is eu seem to have learned their lesson - so refused to help cyprus without them taking a hit aswell
Bad news is:
1) The EU is *still* experimenting on different models and what they can get away with if they spin the story properly.
2) Effectively from Cyprus, saver protection was annulled - basically banks are no longer a safe place to keep your money.
2a) Risk is spread arbitrarily: Conservative people, who take care to avoid crooked banks, will still get stuck with the bill for saving the crooks.
3) Germany was running a vendor-financing scheme, with German banks lending recklessly to people so they could buy new BMW's and Miehle dishvashers for the money. Now, for internal political reasons and to save DB (the stupidest bank of all) the Germans kills the goose that layeth the golden eggs for German industry.
I wonder if you still find it "amusing" when The Cyprus Model arrives at your bank, your savings evaporate and you can only take out GBP 300 per day - at the mercy of some bureaucrat in Frankfurt.
Seems to me that the Senate did not fare too well on this one. Apple seems to have done its homework and kept everything in order. Maybe companies with no tax residence is a bit too far, though.
The complaint about Cost-Sharing seems to be too far on the Senate's part. Apple says that the U.S. and international divisions share R&D costs and similarly share in the rewards. This has been in effect since 1980 and is not something recent. Apple's international revenue last year was 61% of the total, and international paid more than half the R&D (and therefore the notional "ownership" of the IP). Keeping the profit (rewards) overseas seems quite fair.
Recall that the IRS instruction booklet for the basic individual tax form runs to 108 pages, not including the supplementals. Now recall that Congress has so tweaked, twisted, spindled and mutilated the U.S. tax code on behalf of their corporate contributors, that tens of thousands of specialized tax accountants earn lavish fees mining that Himalayan-scale dung heap on behalf of their clients.
And there is no one, not one single elected official in the U.S. government, who is either willing or able to reform that mess. It will continue to devolve, rot, and stink. There are simply too many vested interests benefitting from the status quo.
It is common knowledge that the IRS does not have the resources or staff to successfully audit and prosecute a US-based multinational corporation. Thus the weight of IRS scrutiny falls upon the lower classes, who suffer in helpless indignation and fear.
Do I think Apple is perverting the tax laws? Yes. But they were sold that privilege from a Congress of Hypocrites.
Lies, half-truths and distortions.
You start off okay on the size of the code but jump the shark before you get out of the first paragraph. It's not simply corporate contributors. Much of the sleaze comes from your friend Soros. Others comes from ACORN and the abortion mill known as Planned Parenthood.
There certainly are single elected officials who would love to reform the code and do away with it. Paul Rand is one (I think he's wet behind the ears with his Libertarianism, but I give credit where it is due). His dad would have as well (even if the was a freaking loon on just about everything else except getting rid of The Fed). The problem it that it is at most a handful who do, and (given that screed) I'll bet you would never vote for any of them who are.
It's common knowledge that you can't actually get two IRS agents to agree on the amount of tax DUE from a moderately complex return. My favorite is that every year Forbes sends out a few model tax returns to 12 or 14 accounting companies and asks them to calculate the taxes due. Very, very rarely do even two of them match.
The IRS scrutiny also can't fall upon the lower classes. Before you can fall under their scrutiny, you have to actually be PAYING taxes to the IRS, which apparently 47% of Americans no longer do.
"Don't pay tax in this country - don't sell goods in this country."
Then you won't have much left to buy until those outfits who do fit your "law" come on-board, and start selling goods at any price they want to a very captive audience**
What, you think Apple is the only one following the law!?!?!?!
**And then you'll just hear the butt-hurt consumers scream that they're being ripped off.
If YOU want inexpensive goods (note, this is not the same as cheap) then they will NOT be manufactured in the "west".
As far as I understand it, Apple have companies that pay tax in no country because of a loophole in Irish law. Before Ireland got bailed out, the EU should have demanded that loophole was closed so that it could reap some corporation tax from these "ghost" companies. There is a really clear/good article about the Irish connection on BBC New's website (for once!)
Lessee. Apple has about $100bn in Ireland. 30% of that is (mumble mumble) oh yeah, $30bn.
Now a presidential campaign costs about $2bn. A senate seat costs about $11m and a congressional one about $2m. So with 100 senators and 415 members of congress .. (gets out calculator) .. Apple could buy the White House, the Senate and every member of Congress for , oh about $5bn and have change left over for streamers.
So yes, it would be funny if Apple paid $30bn instead ..
So let's see, the US political system created the labyrinthine tax system that we have today, and when Apple found a way around it, they threw a hissy fit saying that wasn't the spirit of the law. Since when did the spirit of the law has any force? You want something on the books, you better jolly well write it in the statute.
I disagree with Rand Paul and the Tea Party on pretty much everything, but he is bang on this time. Apple played by the rules, they were just smarter than the pols writing them.
"Apple played by the rules, they were just smarter than the pols writing them". Well, certainly smarter than the pol that in two sentences manages to say "we need to change the system because we're too stupid to understand it even though we created it":
"Of course we've got to change it. Of course we've got to change the system," Levin said. "But first we have to understand it."
Apple have been in Ireland for over 30 years... how come no-one came knocking on their doors regarding this issue up to now, seems it was not an issue when there was not enough to go after.
And saying only 1% of its customers are here is rubbish. Ireland is in the EU. You take it as a whole. You cant say that only X% of Apple customers are in California, the US is taken as whole.
And why arent Google, MS, Amazon and others being called in front of the Senate?
Seems like none of them had the balls to raise this issue when SJ was alive. Imagine how he would have chewed them up and publicly spat them all over the ground if he had been brought forward. Would have loved to have seen that.
Totally smacks of 'You have money, give me some'
Cook should have just stood up and said "Are we doing something illegal?" Answer : No.
Gather your papers and walk out. Bill them for your wasted time (and tell them you will pay tax on that. HA)
@MissingSecurity , ok yeah, fair (and correct) point.
Still though, tax rates vary across the US by state. I'm grasping here, trying to not look so 'wrong' ;-)
Maybe Tim should have just told the Senate, that yes, they are correct, and to make the wrong right, Apple are announcing that they are pulling out of the US completely and moving the HQ to X country totally. Cancel the new SpaceShip building and any data centre and manufacturing plant projects.
THEN you would see the Senate getting tax laws changed very fast. (along with an attitude adjustment)
Hell, they could probably BUY Ireland. There's a cool thought. A country called Apple.....
Disclaimer, I am Irish, so my views are biased !!
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