Business

Paradise lost as Apple answers on tax

Apple, the planet’s most profitable business, has been specifically identified in this week’s Paradise Papers mega leak as avoiders of corporate taxation through its offshore accounting activities.

1400-paradise-tight-1280x640 Campaigners have claimed for years that big tech firms are paying inadequate taxes considering their vast global profits. But the 2017 Paradise Papers show the extent of the challenge in trying to collect adequate taxes from multinationals that know no borders, and laws that permit avoidance.

The papers will also reinforce the widely held view that too many technology businesses are failing to do the right thing in their corporate practices, following separate allegations on discrimination in the workplace and failures to protect privacy.

The Paradise Papers leak more than 13m documents from offshore law practice Appleby, along with companies in other jurisdictions. A global investigation has followed involving close to 100 news outlets. The documents were obtained by the German newspaper Süddeutsche Zeitung, though the original source is unknown.

A 2015 estimate from the Organisation for Economic Cooperation and Development suggests that tax avoidance strategies from big tech players and others cost governments nearly £240bn in lost tax revenue.

BBC’s Panorama this week focussed on Apple – the world’s most profitable company – and its efforts to continue to avoid paying billions in corporate taxation, by moving most of the $252bn it holds in untaxed offshore cash to Jersey.

Apple told the BBC that a new internal structure had not lowered the amount of tax it pays, insisting it remains the world’s biggest taxpayer, paying around $35bn in corporation tax over the past three years.

Until 2014 Apple had been exploiting the so-called ‘double Irish’ loophole that allowed the firm to funnel all of its non-US sales through Irish subsidiaries that effectively remained stateless for tax purposes. Following an EU investigation in 2013, the Irish government effectively closed the loophole. Apple then started looking at other offshore jurisdictions that could act as the tax residency for its Irish subsidiaries.

The Paradise Papers show Apple wanting to keep the move from Ireland to Jersey (which has zero corporation tax for foreign firms) a secret. Apple made £44.7bn outside the US but paid $1.65bn in taxes – around 3.7%, says Panorama.

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