Apple didn't cough up much to jolly old England in corporate taxes last year. More specifically, perhaps, it paid ZERO corporation tax in the United Kingdom in 2012.
Although some are up in arms about the matter, Apple really doesn't have to defend itself given the presence of circumstances clearly in the company's favor (and within the letter of the law), according to a report Monday from Forbes.
First, all iTunes sales are actually made in Luxembourg. Why? The VAT rate there is lower and one of the peculiarities of EU tax law is that “electronic services” pay VAT in the country they emanate from.
Second, for sales outside the US, Apple apparently buys the equipment from the manufacturers in China through an Irish company. Today's explanation from Forbes indicates that the equipment is then sold to other dealers, distributors, or Apple Stores around the world. "Prices are such that the stores don’t really make much money," Forbes reports. In fact, the margins pretty much cover the actual fixed and variable costs of having stores and making sales.
The final part is in those operating profits in the UK. The fact is that operating profits are not what are taxed: profits before tax are what are taxed. And issuing stock to the management is a part of doing business.