Finance Finance News Apple’s solution to tax crackdown: Find a new loophole

Apple’s solution to tax crackdown: Find a new loophole

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Apple is accused of tax avoidance in an analysis of the Paradise Papers. Photo: Getty
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IT giant Apple reacted to global accusations of tax avoidance by secretly shifting key parts of its overseas subsidiaries to Jersey, according to an analysis of the leaked Paradise Papers documents.

Apple revamped its business empire to take advantage of tax loopholes on the European island after a crackdown on Ireland’s loose rules began in 2013, the documents reveal.

Apple moved the tax home of two Irish subsidiaries to Jersey, a self-governing island in the English Channel between Britain and France, and also made Ireland the tax home of a different European subsidiary.

An Apple spokesman told the New York Times that the company told regulators in the US and European Commission of the reorganisation of its Irish subsidiaries at the end of 2014, and said the moves did not reduce its tax payments in any country.

Illegal corporate tax dodging costs the public coffers $2.5 billion a year in lost revenue, figures from the Australian Taxation Office last month revealed.

That’s a shortfall of almost 6 per cent of what the nation’s biggest companies – including foreign-owned multinational and domestic corporations – ought to have paid.

“US multinational firms are the global grandmasters of tax avoidance schemes that deplete not just U.S. tax collection but the tax collection of most every large economy in the world,” former corporate tax adviser  Edward Kleinbard was quoted as saying by the NYT.

Apple said it complies with laws and supports comprehensive international tax reform and a simpler tax system.

The NYT and the International Consortium of Investigative Journalists cited confidential records that were obtained by the German newspaper Suddeutsche Zeitung and shared.

The cache of 13.4 million secret documents came largely from Appleby, a Bermuda-based law firm that helps businesses and wealthy individuals find tax shelters.

The moves came after a US Senate subcommittee found in 2013 that Apple had avoided tens of billions of dollars in taxes by using overseas havens.

The paper said Apple has $US128 billion ($A179 billion) in offshore profits not taxed by the US.

Sportswear giant Nike was among the multinational corporations implicated in the Paradise Papers of moving profits into tax havens.

ABC’s Four Corners on Monday night revealed Nike sold around $500 million of sportswear in Australia last year, but recorded profits of just 2 per cent of its sales, therefore paying just $4.5 million in tax.

Matthew Gardner, from the Institute on Taxation and Economic Policy, told the program that, internationally, Nike had about $US1.5 billion ($1.96 billion) of profits “on which they’re paying virtually no tax”.

– With AAP

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