Apple in trouble with US Congress over taxes

Apple is under fire at the US Congress over the payment of taxes, with government officials accusing the company of deliberately keeping money in foreign countries to avoid paying the US' higher tax rate.

Apple is under fire at the US Congress over the payment of taxes, with government officials accusing the company of deliberately keeping money in foreign countries to avoid paying the US' higher tax rate.

 
Senator Carl Levin, a Democrat for Michigan, gave an opening statement to Congress, where he claimed that Apple “amassed more than $100 billion in offshore cash in a tax haven.”
 
Senator John McCain, the Republican who ran for the Presidency in 2008, used even harsher rhetoric, saying: “While Apple claims to be the biggest US corporate taxpayer, it is also among America's largest tax avoiders.”
 
Apple's presence in Ireland was a particular focus of the Congress probe. Apple has had a long history in Ireland, going back to the 1980s, with 4,000 employees in the country. Ireland's low corporate income tax rate of 12.5 percent has been a major attraction for big businesses, with many technology giants operating their European bases in Dublin or Cork. 
 
 Apple in trouble with US Congress over taxes
 
There are accusations, however, that Apple has moved funds out of the US to an Irish subsidiary with no employees, raising tax evasion red flags. Apple confirmed that two Irish subsidiaries, known as Apple Operations Europe and Apple Sales International, paid a measly two percent tax. Levin claims that 95 percent of the creativity that goes into the products is made in California, but two-thirds of the profit is made in Ireland.
 
“They are not issues which arise from the Irish taxation system,” said Eamon Gilmore, Irish Tánaiste (Deputy Prime Minister). “They are issues which arise in other jurisdictions.” The Irish government has denied allegations that the country is a tax haven.
 
Tim Cook, Apple's CEO, claims that $6 billion was paid to the US Treasury last year, though this number appears to be disputed by Levin. Cook also highlighted the contribution Apple has made to the US' workforce, such as the 300,000 jobs created for developers thanks to the App Store.
 
None of Apple's tax tactics appear to be illegal, a fact that seems to be recognised by the US Congress. Apple has called for tax reform in the US, including lower corporate income tax, as a way to encourage more business in the country. New regulations and changes to the law appear to be the only solution to this issue, which is widespread among the technology giants.
 
Source: Reuters