Apple's tangled web of tax shelters

Apple's web of subsidiaries, which house billions of dollars in cash offshore to avoid U.S. taxes, not only provides insight into the tech company's audacious strategy but it also underscores the flimsiness of America's tax code.

Apple, the U.S's most profitable tech company, has set up a web of tax shelters so complex it goes beyond anything most experts have ever seen, reported New York Times.

Apple paid more than $6 billion in taxes in the U.S. last year on its American operations. The company has managed to sidestep taxes on tens of billions of dollars it earned outside the U.S. by creating offshore entities, many of which are in Ireland, while claiming to be a tax resident of nowhere.

Technically, Apple isn't breaking the law. It is, however, exploiting the numerous loopholes contained in the U.S. tax code. And that's angered politicians, many of whom will square off against CEO Tim Cook in a congressional hearing today.

For example, Apple consolidates as much of its offshore earnings as possible in Ireland, where the company has an Irish tax rate of less than two percent, according to a congressional subcommittee memo on offshore profit shifting. Apple also has avoided other taxation through vehicles that have allowed the company to shift profits out of other developed countries as well.