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  • Australian Government to Investigate Apple and Others for the Use of Tax Loopholes

    The Australian government has recently declared that American tech giants: Apple, Google and Microsoft, are all under investigation for their use of multinational corporations to pay lower taxes. The move seems to be following in the footsteps of both the US and the EU.

    According to the Australian Tax Office, the trio of companies are officially “under review” for their tax practices. As part of the inquiry that is being made, the government questioned Apple executive Tony King who oversees the company’s operations in Australia and New Zealand. The three companies have all denied shifting profits or avoiding government taxes in Australia. The executives that are representing the tech giants are currently declining to provide full details about their financial structures.

    For those of you who didn’t know, the most well-known tax loophole is the so-called “Double Irish” provision which allows companies with operations in Ireland to route profits to another Irish subsidiary which has a tax residency in a tax-free nation such as the Cayman Islands. The only companies in Ireland that are managed and controlled in the region are considered tax residents. Apple Operations International is incorporated in Ireland but isn’t managed and controlled there.

    The finance minister in Ireland announced that the country will be ending the “Double Irish” accounting scheme starting in 2015 for new companies. For those who were previously leveraging the strategy including Apple, Google, among others, the companies will have until 2020 to find another country with tax provisions that are favorable.

    Furthermore, the UK also responded with a new tax that was passed earlier in the month, directly targeting companies such as Apple. The so-called “Diverted Profits Tax” sees multinationals owe 25% on offshored profits above the nation’s Corporation Tax of between 20% and 21%.

    It should be noted that Apple also faced criticism from the European Union despite continuing to categorically deny any wrongdoing. The Cupertino California executives were also grilled in front of a US Senate panel about taxes with Apple CEO Tim Cooks stating that the company pays every dollar it owes. With this whole issue aside, President Obama’s administration also proposed a one-time 14% levy on earnings held by US companies overseas. These funds would potentially be allocated into a $478 billion public works plan.

    We’ll have to wait and see what happens as the investigation continues.

    Source: Reuters via AppleInsider
    This article was originally published in forum thread: Australian Government to Investigate Apple and Others for the Use of Tax Loopholes started by Akshay Masand View original post
    Comments 3 Comments
    1. SpiderManAPV's Avatar
      SpiderManAPV -
      While it certainly isn't ethical, how can you be found guilty of using loopholes when the actual definition of a loophole is that something is unintentionally legal? Isn't that the whole point of a loophole?
    1. bigboyz's Avatar
      bigboyz -
      ^^Agreed. Looks like countries are tired of losing out on that tax $$.
    1. Ambi_Valence's Avatar
      Ambi_Valence -
      Someone mind explaining why we still have these loopholes? I love political humour.
      That said, I do believe Apple are doing more than their fare share of 'tax dodging'.