Published: Tue, November 07, 2017
Science | By Cecil Little

Race against time to move Apple's profits to Jersey

Race against time to move Apple's profits to Jersey

Apple revamped its overseas subsidiaries to take advantage of tax loopholes on the European island of Jersey after a crackdown on Ireland's loose rules began in 2013, according to The New York Times and the International Consortium of Investigative Journalists.

In May 2013, Apple CEO Tim Cook testified in front of the United States Senate and defended the company's tax structure.

An Apple spokesman said the company hadn't engaged in any wrongdoing. The findings, part of a leak of documents dubbed the "Paradise Papers", say the company chose the tiny island of Jersey in the English Channel to store its over $250 billion in cash.

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Hundreds of individuals and companies reportedly have had their overseas investments exposed by the files, which are also said to reveal that major global companies have exploited offshore schemes to avoid tax. "Under this arrangement, the MacBook-maker has continued to enjoy ultra-low tax rates on most of its profits and now holds much of its non-US earnings in a $252 billion mountain of cash offshore".

The world's most profitable firm has a secretive new structure that would enable it to continue avoiding billions in taxes, the Paradise Papers show. The partnership mirrors the treatment of 2015's Panama Papers leak. Appleby was not immediately available for comment. That maneuver lets the companies avoid paying hefty taxes they could face by bringing the cash back to the US.

Vestager said Apple was paying just €50 ($83.64) in tax on every €1million ($1.67m) of profit it made in 2014.

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In its emails to Appleby, Apple asked whether it would be possible to "obtain an official assurance of tax exemption" in countries such as Bermuda and the British Virgin Islands, the BBC reports.

The amount was a stark contrast to the Irish corporation levy of 12.5 per cent or the United States rate of 35 per cent allowing the iPhone manufacturer to keep billions of pounds extra in profits. Its effective tax rate decreased to 0.005 per cent in 2014, the Commission claimed.

In August a year ago, the European Commission concluded that Ireland gave Apple "illegal tax benefits" and levied the firm with an £11.6 billion in back taxes. As a result, the European Union slapped Apple with a $14.5 billion tax bill in mid-2016. Instead their head offices were legally "stateless" for tax purposes, allowing Apple to gain roughly the same tax effect without shifting profits offshore. "A place with no state interference, no politics and no public scrutiny".

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As Apple came under pressure in the U.S. and Europe about what was called the "double Irish" scheme it enlisted offshore finance law firm Appleby to find a new place to stash cash out of reach of tax collectors, according to reporting. Appleby listed two Apple subsidiaries as based in Jersey, starting in 2015.

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