The US Senate Committee has severally criticised Apple for its “Holy Grail of tax avoidance.” According to a report that was co-written by Senator Carl Levin and John McCain, the Committee has blamed Apple for reaching a deal with the Irish government as result of which the company has avoided a tax rate it is legally bound to pay for operating its subsidiaries located in the region. The report has claimed that subsidiaries of Apple have just paid 2 percent tax rather than the standard 12.5 percent tax rate of Ireland that is already quite low when compared to other Western European companies.
However, the Prime Minister of Ireland, Enda Kenny, has declined these claims an the deputy of Mr. Kenny, Eamon Gilmore, has out right rejected the committee’s allegations, which assert that the country should take responsibility for offering low tax rates to a number of multinational companies according to The Telegraph.
He said, “Ireland does not – I will repeat – does not do special tax rate deals with companies, we don’t have any special extra-low corporate tax rate for multinational companies.”
“Reports of a lower effective tax rate appear to arrive at their figures by lumping together the profits earned by companies in Ireland and other jurisdictions and incorrectly suggests that the Irish tax does, or should, apply to both.”
On the other side, while testifying in front of the US Senate, Tim Cook fully defended his company’s stance and also highlighted the $6 billion amount that Apple has paid during last year in terms of various taxes. In fact, Cook has put the tax amount of Apple into numbers by saying that his company pays 30.5 percent of their revenue in taxes to the U.S. government.
When Senator McCain asked about Apple’s holding company, AOI (Apple Operations International), Cook said that:
“AOI was created in 1980. The relationship between Apple and the Irish government still exists today. We’ve built up a significant skill base there of people who have a significant understanding of the European market. AOI is nothing more than a holding company. A holding company is a concept that many companies use. It’s not an operating company. The dividends that go into this company have already been taxed appropriately in their local jurisdictions. AOI to me is nothing more than a company that has been set up to provide an efficient way to manage Apple’s cash. From income that’s already been taxed. The investment income that comes out of AOI is taxed in the United States at the full 35% rate. AOI does not reduce our US taxes at all.”
The Chief Executive Officer of Apple also highlighted the point during the hearing that although he does not have a complete understanding of tax residence and tax presence, but both still AOE (Apple Operations Europe) and ASI (Apple Sales International) are regularly paying their taxes in Ireland, whereas AOI simply makes investment income, since it’s just a holding company. Moreover, all that revenue it makes is taxed “at the full 35% level,” in the U.S.
Source: iPhoneinCanada
Photo: Gubu-World
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