Paradise Papers: Apple's secret tax bolthole revealed

Paradise Papers: Apple's secret tax bolthole revealed

The tiny island of Jersey in the English Channel has reportedly become a tax haven for companies like Apple.

Although it was aimed at Double Irish structures, the potential rule change would ban all Irish companies from claiming tax residency in a tax haven.

ASI had made more than $120bn (£91.52bn) - almost 60% of Apple's earnings worldwide - and had become their biggest profit generator, and most of the profits had been transferred to AOI as dividends.

Much of that profit was transferred as dividends to Apple Operations International.

One email from the Paradise Papers contains a 14-item questionnaire sent in March 2014 to Apple's offices in Bermuda, the British Virgin Islands, the Cayman Islands, Guernsey, the Isle of Man and Jersey.

"Confirm that an Irish company can conduct management activities. without being subject to taxation in your jurisdiction". So the iPhone maker went hunting for another place to park its money, newly leaked records show.

According to the Guardian, the Paradise Papers revealed Apple in the process of moving two subsidiaries-Apple Operations International (AOI) and Apple Sales International (ASI)-to Jersey.

A clue as to why a multinational might want a subsidiary that was liable for taxes in Ireland can be found in Noonan's budget announcement in 2014.

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There is an ongoing legal battle between the Irish government, Apple and the European Union to claw back more money off the tech company. Importantly for multinationals, it was also available to an Irish company that bought intangible property from another company within the same group.

European regulators are trying to force countries including Ireland, Belgium, Luxembourg and the Netherlands to collect back taxes from big companies that relied on offshore arrangements.

Tax strategies like the ones used by Apple - as well as Amazon, Google, Starbucks and others - cost governments around the world as much as $240 billion a year in lost revenue, according to a 2015 estimate by the Organization for Economic Cooperation and Development.

The country's GDP for 2015 leapt by 26%, boosted by close to $270bn of intangible assets suddenly appearing in Ireland's national accounts at the start of the year.

As Apple came under pressure in the USA and Europe about what was called the "double Irish" scheme it enlisted offshore finance law firm, Appleby, to find a new place to stash cash out of reach of tax collectors, according to reporting.

Instead of paying Irish corporation tax of 12.5%, or the USA rate of 35%, its foreign tax payments rarely amounted to more than 5 % of its foreign profits - and dipped below 2% in some years.

"U.S. 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", said Edward Kleinbard, a former corporate tax adviser to such companies, now a law professor at the University of Southern California.

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".

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