8/10/2019 Apple Executives Face Senate Grilling
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Last updated: May 21, 2013 12:12 pm
By James Politi in Washington and Richard Waters in San
Francisco
Tim Cook, Apples chief executive, faces a grilling by a US
Senate committee on Tuesday over claims that the
company exploited loopholes to avoid paying billions of
dollars in tax.
Mr Cook and two other executives including Peter
Oppenheimer, Apples chief financial officer will appear
at 9.30 Washington time at a hearing set to shine a harsh
political spotlight on the US technology group.
On Monday the Senate permanent subcommittee on investigations
released a 40-page report on
Apples international tax structure which accused the company of
using Irish subsidiaries that are
not tax residents of any country.
Apple sought the Holy Grail of tax avoidance, said Carl Levin,
the Democrat who chairs the panel
and will lead the hearing. It has created offshore entities
holding tens of billions of dollars, whileclaiming to be
tax-resident nowhere.
Apple, in testimony prepared for Tuesdays hearing, denied it
used tax gimmicks to lower its
payments and claimed to be the largest payer of corporation tax
in the US, accounting for $1 in
every $40 paid last year.
The company also denied that Apple Operations International
(AOI) was a shell company,
arguing that the entity had been set up to manage its global
flow of funds and that its activities
did not reduce Apples US taxes.
Apple also defended its practice of shifting part of the costs
of its research and development to
Ireland, even though it conducts virtually all of the work in
the US a technique that was
attacked as a tax-avoidance scheme by the committee. The
arrangement was authorised by US law
and complies with all US regulations, Apple said.
Mondays Senate report said Apples elaborate use of loopholes for
international profits allowed it
to save US tax on $44bn in otherwise taxable offshore income in
the past four years. But the
Reuters
ft.com > companies >
e executives face Senate grilling - FT.com
http://www.ft.com/intl/cms/s/0/9d3e8e8c-c177-11e2-b93b-00144
5/21/2013
8/10/2019 Apple Executives Face Senate Grilling
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FT series
Great tax race
As the G20 pledges to crack
down on multinational tax
avoidance, the FT examines
how and why governments help
companies reduce their tax
burden
A company that
found remarkable
success by harnessing
American ingenuity
.
.
.
should not be shifting
its profits overseas to
avoid the payment of
US tax
- John McCain, top Republican on
the Senate permanent
subcommittee on investigations
committee said there was no indication Apple had done anything
illegal in attempting to minimise
its tax bill.
This is the definition of a tax loophole, technically something
which may be in compliance with
the law but violates the spirit of the law, Mr Levin said.
Staff for the committee said the most surprising findings
included the use of the non-tax resident
subsidiaries in Ireland, through which the bulk of Apples
international profits are funnelled.
One of them, Apple Sales International, paid virtually no taxes
on
sales of $74bn between 2009 and 2012. In 2011, it paid $10m
in
taxes on $22bn in profits, or a rate of 0.05 per cent, according
to the
panel.
Another unit with no tax home, AOI, did not file an income
tax
return in any country over the past five years, despite income
of
$30bn between 2009 and 2012, the investigation found.
Establishedin 1980, AOI holds board meetings in the US but has no
physical
presence or employees.
I have never seen anything like this, we dont know of anyone
who
has seen anything like this, Mr Levin said.
In addition, the investigators found that Apple cut a special
deal with
Ireland to apply a tax rate of less than 2 per cent on any
profits that
are taxable in the country, well below the 12 per cent Irish
corporate tax rate.
Apple is the third big US technology group to face scrutiny from
the Senate investigations panel
after Microsoft and Hewlett-Packard and committee staff said
Apple did co-operate with the
probe.
The disapproval of Apples tax practices was bipartisan. John
McCain,
the subcommittees top Republican, told reporters Apple had
orchestrated a tax scheme that was egregious and outrageous.
A company that found remarkable success by harnessing
Americaningenuity and the opportunities afforded by the US economy
should not
be shifting its profits overseas to avoid the payment of US
tax,
purposefully depriving the American people of revenue, Mr
McCain
said.
The scrutiny of Apple may spark further debate on the structure
of the
USs tax code. Congress and the White House are debating whether
to
e executives face Senate grilling - FT.com
http://www.ft.com/intl/cms/s/0/9d3e8e8c-c177-11e2-b93b-00144
5/21/2013
