Paradise Papers leak: What Apple had to say about Jersey tax claims after Irish row with EU

 
Lynsey Barber
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Apple CEO Tim Cook Testifies At Senate Hearing On U.S. Tax Code
Apple and boss Tim Cook say it complys with tax laws around the world (Source: Getty)

Apple has attempted to distance itself from a fresh tax row, in which it is claimed the firm secretly changed its tax structure after the EU's clampdown on its arrangements in Ireland.

According to the Paradise Papers, a trove of information about offshore tax leaked to an investigative journalism organisation, Apple moved cash-rich parts of its business to Jersey, where the corporate tax rate is zero for foreign firms.

The US tech giant has responded to the claims, saying it did not move any operations or investments from Ireland, where it has been told to pay back taxes of €13bn by Europe's competition chief.

Read more: DEBATE: Can we close the Paradise Papers tax loopholes?

It said changes to its corporate structure in 2015 were to preserve tax payments to the US, not to reduce its taxes anywhere else.

But while it may not have moved operations or investments, a change in Irish laws forced the company to search for a location for "residency".

According to the leaks, Apple holds $252bn of untaxed offshore cash in the small channel island. In 2014 following the launch of the investigation into its Irish tax affairs, Apple asked legal advisers about several offshore jurisdictions where it could potentially base itself for tax purposes, including the British Virgin Islands, Bermuda, the Cayman Islands, Mauritius, the Isle of Man, Jersey and Guernsey.

Apple stressed it is the world's largest taxpayer and that it pays billions of dollars of tax to the US at a rate of 35 per cent and pays an effective tax rate of 21 per cent foreign earnings. It also said it supports efforts on international tax reform.

Read more: Paradise Papers: The danger of tarring all those named with the same brush

Here's Apple's response in full.

“The debate over Apple’s taxes is not about how much we owe but where we owe it. As the largest taxpayer in the world we’ve paid over $35bn in corporate income taxes over the past three years, plus billions of dollars more in property tax, payroll tax, sales tax and VAT. We believe every company has a responsibility to pay the taxes they owe and we’re proud of the economic contributions we make to the countries and communities where we do business.

"Under the current international tax system, profits are taxed based on where the value is created. The taxes Apple pays to countries around the world are based on that principle. The vast majority of the value in our products is indisputably created in the United States — where we do our design, development, engineering work and much more — so the majority of our taxes are owed to the US.

"When Ireland changed its tax laws in 2015, we complied by changing the residency of our Irish subsidiaries and we informed Ireland, the European Commission and the United States. The changes we made did not reduce our tax payments in any country. In fact, our payments to Ireland increased significantly and over the last three years we’ve paid $1.5bn in tax there — seven percent of all corporate income taxes paid in that country. Our changes also ensured that our tax obligation to the United States was not reduced.

"We understand that some would like to change the tax system so multinationals’ taxes are spread differently across the countries where they operate, and we know that reasonable people can have different views about how this should work in the future. At Apple we follow the laws, and if the system changes we will comply. We strongly support efforts from the global community toward comprehensive international tax reform and a far simpler system, and we will continue to advocate for that.”

The company's market cap briefly shot above $900bn last week on the back of huge demand for the new iPhoneX.

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