Feeds

SEC review clears Apple of dodgy tax dealings

When Irish eyes are smiling

Internet Security Threat Report 2014

The US Securities and Exchange Commission has given Apple's finances a clean bill of health after a review of the company's use of an Irish subsidiary to dodge corporate taxes be more tax efficient.

In May Apple's CEO Tim Cook was quizzed by a congressional committee about how it managed to pay such a relatively small amount of tax, despite being one of the most valuable companies on the planet. A congressional report claimed Apple has managed to avoid paying $79bn in US taxes between 2009 and 2012.

"Apple complies fully with both the laws and spirit of the laws," Cook told Congress at the time. "And Apple pays all its required taxes, both in this country and abroad."

The following month the SEC asked Apple for more details about its tax affairs, particularly where it was stashing its overseas earnings. Apple responded by giving more information about its system and revealed that it was using an Irish subsidiary to handle most of its overseas earnings because of the very low tax rate there.

Last year, Apple funneled over $40bn in revenues through its Irish subsidiary, enabling it to avoid paying nearly $6bn in US taxes. Apple said it had no plans to repatriate the earnings to the US and will use the money for investment in new retail stores and services.

Apple is not alone in using Ireland's generous corporate tax regime to dodge paying tax in other countries. Google is also a user of the so-called "double Irish," as is Microsoft. And while it's perfectly legal, the SEC wanted Apple to make it clear that the company faced a level of risk if the Irish government, currently in the midst of a crippling austerity push, decided to jack up its tax rates.

Cook said that the company has no plans to repatriate earnings to the US unless it receives a tax break for doing so. The company is one of many tech companies pushing for a tax break to repatriate foreign earnings and argues that such a move would spur jobs growth in the US by allowing the money to be used for investment.

The problem with that is that it has been tried before and it doesn’t work. The 2004 Homeland Investment Act was signed off by President Bush as a one-off deal that would allow firms to repatriate funds with a tiny tax bite, again with the argument that it would stimulate employment, but the vast majority of the $362bn that came into the country was used to pay off shareholders and provide bonuses for management.

After discussions with the SEC, Apple has agreed to amend the language of its SEC filings to reflect the risks of using its Irish subsidiary and the agency has now given Cupertino a clean bill of tax health. ®

Providing a secure and efficient Helpdesk

More from The Register

next story
Doctor Who's Flatline: Cool monsters, yes, but utterly limp subplots
We know what the Doctor does, stop going on about it already
Facebook, Apple: LADIES! Why not FREEZE your EGGS? It's on the company!
No biological clockwatching when you work in Silicon Valley
'Cowardly, venomous trolls' threatened with TWO-YEAR sentences for menacing posts
UK government: 'Taking a stand against a baying cyber-mob'
Happiness economics is bollocks. Oh, UK.gov just adopted it? Er ...
Opportunity doesn't knock; it costs us instead
The 'fun-nification' of computer education – good idea?
Compulsory code schools, luvvies love it, but what about Maths and Physics?
Ex-US Navy fighter pilot MIT prof: Drones beat humans - I should know
'Missy' Cummings on UAVs, smartcars and dying from boredom
Sysadmin with EBOLA? Gartner's issued advice to debug your biz
Start hoarding cleaning supplies, analyst firm says, and assume your team will scatter
Don't bother telling people if you lose their data, say Euro bods
You read that right – with the proviso that it's encrypted
prev story

Whitepapers

Forging a new future with identity relationship management
Learn about ForgeRock's next generation IRM platform and how it is designed to empower CEOS's and enterprises to engage with consumers.
Why cloud backup?
Combining the latest advancements in disk-based backup with secure, integrated, cloud technologies offer organizations fast and assured recovery of their critical enterprise data.
Win a year’s supply of chocolate
There is no techie angle to this competition so we're not going to pretend there is, but everyone loves chocolate so who cares.
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?
Intelligent flash storage arrays
Tegile Intelligent Storage Arrays with IntelliFlash helps IT boost storage utilization and effciency while delivering unmatched storage savings and performance.