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Apple - Pay

In Category: Thoughts
Published: 31/08/2016

Benefits for Billionaires

Over a number of years Apple have apparently variously paid between 0.005% and 1% tax to the R.O.I. For the sake of simplicity I will assume they have, on average, paid 0.5%. The normal rate of corporate taxation for the Republic is 12.5%; Apple have therefore paid 1/25th of the tax that every other company has to pay in the jurisdiction with the difference being pocketed by Tim Cook and his fellow Apple shareholders. This position is, by any measure obscene; it is obscene from the perspective of the ordinary individual taxpayer who coughs up between 20% and 60% of their earnings across Europe and from the position of millions of SME businesses who cannot increase their profits by evading tax and from the position of larger corporates that, while able to do so, elect to pay full and fair taxes in the jurisdictions in which they make their profits.

I’m Alright Jack

The population of the R.O.I. is 4.8M and that of Europe is 162 times larger at 742.5M. Assuming roughly equal profit per capita across the E.U. a 0.5% tax take on profits makes fantastic sense if you are the R.O.I. your tax take is no longer 12.5% of the profit generated from sales to your population: it magically becomes 81% (0.5 X 162) of the legitimate profit on sales in your country. There are no losers other than the whole of the rest of the population of the EU.

Sour Apple Pie

Charles Schumer, one of the highest-ranking Democratic senators, said: "This is a cheap money grab by the European Commission, targeting US businesses and the US tax base. ", and "By forcing their member states to retroactively impose taxes on US companies, the EU is unfairly undermining our ability to compete economically in Europe while grabbing tax revenues that should go toward investment here in the United States," he may have a point but the U.S. could, if it wished, attempt to legislate to prevent one of its companies acting in this manner.

Had Apple’s E.U. profits had been taxed in the countries in which they were generated the average levy would have been about 20% - so by moving all profit to the R.O.I. Apple were already about 7.5% up. Apple does not want this €13 Billion because it needs it to operate – it has reserves of over $200 Billion; it wants it because it wants it – greed pure and simple. It has managed to keep hold of it because it has the economic might to bully nations; it can say to The Republic of Ireland you can either have nothing and we will base ourselves elsewhere or 0.5% of everything we make in the whole of Europe which amounts to just about six and a half times (81/12.5) more than you would get if we permitted you to tax us at your full rate on the genuine profit from sales in your country.

Cough Up

The European Commission cannot stop Tax Competition (for a great note on Tax Competition please see Jolyon Maugham QC’s post on the Legal Business Blog at  http://bit.ly/2c8roXN) and it probably has a limited ability to stop corporates bullying countries but it can put a stop to unlawful state aid within its jurisdiction. Whether the money should properly be distributed throughout the European States in which the profits were generated or, in part or whole, be taxed and received in the U.S. (incidentally at a rate of 39.1%) it should not remain in Apple’s hands. 

Written by Mark Husband

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