Apple moved billions into Jersey after Ireland tightened tax rules

Ireland's lax tax rates were too onerous for the world's most profitable company, so it skipped into the English Channel.

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(Image: Shutterstock / Laura Hutton)

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, secret documents have revealed.

The New York Times 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 million secret documents came 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.

At the time, Apple CEO Tim Cook said the company did not use tax gimmicks, claimed Apple did not move intellectual property to offshore tax havens, and did not have hold money on Caribbean islands.

The paper said Apple has $128 billion in offshore profits not taxed by the US.

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

An Apple spokesperson told the Times that the company told regulators in the US and European Commission (EC) 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.

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

In August 2016, the EC said Apple should repay €13 billion in taxes to Ireland following a finding that Apple had used two shell companies incorporated in Ireland so that it could report its Europe-wide profits at effective rates well below 1 percent, at one point paying a tax rate of just 0.005 percent. The EC labelled the deals between Ireland and Apple as illegal state aid.

Last month, the commission announced that it was taking Ireland to court for failing to collect the back taxes from Apple.

Ireland's finance ministry said it had not accepted the commission's analysis in the Apple state aid decision, but was committed to collecting the unpaid taxes pending an appeal of the ruling by Dublin. Apple is also appealing the case.

Earlier this year, Apple Australia said all Australian revenue was booked locally, and had no penalties imposed following an audit by the Australian Taxation Office covering the 2012-16 fiscal years.

"Apple continues to have a straightforward business model here in Australia that has essentially remained unchanged for decades," Apple Australia managing director Tony King said at the time.

"We buy, distribute, and sell Apple's products to resellers and customers -- the revenue from which is all recorded locally in our accounts."

King said that the company had not needed to make any changes to its business model following the introduction of multinational tax avoidance and profit shifting laws in Australia.

Last week, the Cupertino company posted $13 billion in operating income on $53 billion of revenue for the fourth quarter. For the full year, Apple made $61 billion in operating income from $229 billion in sales. Net income for the 12 months to September 30 stood at $48 billion.

Apple is far from the only tech multinational to make use of tax havens, as Google told an Australian Senate committee in August.

Google revealed its Google Ireland Holdings entity is tax resident in Bermuda, a country with a zero percent tax rate, and the company split its profits between Bermuda and Ireland.

The search giant claimed Ireland was a multilingual hub that allowed the company to deal with the number of different languages spoken across Europe.

With AAP

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