Paradise Papers: Apple moved offshore tax haven to Jersey after Ireland crackdown

Dianna Christensen
November 8, 2017

Apple revamped its overseas subsidiaries to take advantage of tax loopholes on the European island of Jersey after a crackdown on Ireland's loose rules began in 2013, according to The New York Times and the International Consortium of Investigative Journalists.

It alleges that Apple lawyers sent a questionnaire to the offshore finance firm Appleby, seeking to discover what tax havens like the British Virgin Islands, Bermuda, the Cayman Islands, Mauritius, the Isle of Man, Jersey and Guernsey could do for Apple.

Before the change in tax residency, the two subsidiaries helped Apple hold $137bn (£104.59bn) in cash, mostly coming from barely taxed non-US profits.

Margrethe Vestager said she had spoken to Apple about the controversial tax structures highlighted in the Paradise Papers.

Apple said the new structure did not reduce tax payments in any country and "ensured that our tax obligation to the United States was not reduced". For instance, the company said its 2015 corporate reorganization was "specially created to preserve its tax payments to the United States, not to reduce its taxes anywhere else".

"US multinational firms are the global grandmasters of tax avoidance schemes that deplete not just USA tax collection but the tax collection of most every large economy in the world", former corporate tax adviser Edward Kleinbard was quoted as saying by the NYT.

Until 2014 Apple's two Irish companies were seen as "stateless" for tax purposes, allowing it to pay a tax rate of as little as 0.005 per cent on non-US profits....

Apple on Monday responded to the claims, suggesting that the move was part of its corporate restructuring to comply with Ireland's rules and to ensure that "tax obligations and payments to the U.S. were not reduced".

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In 2013, Apple was accused by two of America's most senior politicians of using Ireland to help cut its global tax bill to nearly zero.

Apple started booking profits through Jersey after the Irish government started to clamp down on the company's tax affairs in Ireland.

The majority of the leaked Paradise Papers come from Appleby, which specialises in offshore accounts.

Apple CEO Tim Cook in May 2013 testified before Congress about his company's tax practices.

MORE: Paradise Papers: how do offshore tax avoidance schemes work?

The EU, meanwhile, believed Ireland wasn't collecting enough taxes and instead gave companies like Apple too big of a break on Ireland's already low 12.5 percent tax rate.

That expenditure could be used to completely write-off the need to pay tax on profits booked by Apple Operations Europe, because the 80 per cent cap was removed.

"Apple pays tax at Ireland's statutory 12.5 per cent", Apple said in a statement on Monday night in response to global coverage of its tax affairs in this and other media outlets.

Other reports by GlobalViralNews

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