Apple shifts €5.8bn Oz profit to Irish arm

More than $AUD8.9bn (€5.8bn) in profits have flown from Apple’s Australian operations in the past 10 years to Apple’s Cork subsidiary, it has emerged.

Due to a requirement in Australian law, Apple was forced to reveal figures for its Cork-based subsidiary, Apple Sales International.

These figures were considered by the company to be so sensitive that it redacted them from its submissions to the US Permanent Subcommittee of Investigation into Apple’s tax practices.

The figures were revealed by The Australian Financial Review which estimated that the maker of iPhones, iPads and MacBooks shifted $AUD8.9bn in untaxed profits from its Australian operations through a complex tax structure involving Ireland.

Apple Sales International has reported more than $100bn (€74bn) US profits for the last five years.

Apple Sales International pays third-party manufacturers, like Foxconn in Asia, to build Apple products around the world then it resells the products to local Apple operations around the world at a healthy profit.

According to The Australian Financial Review investigation these margins are up to nearly 40%.

“In 2002 it was a 17% mark-up on the production cost. But as Apple produced new product lines like the iPhone and the iPad it was able to charge higher margins. By 2009 the mark-up had risen to 38.9%.

“In 2009 Apple Australia reported it paid $AUS1.78bn to ASI for Apple products. ASI reported a 38.9% margin of that sale, which infers that $AUS690m of Apple Australia’s payments for product went straight to Ireland, tax-free,” the report said.

Certain Apple companies registered in Ireland pay no tax in the country due to a loophole in both the Irish and US tax codes.

Apple has insisted that it not only abides by the letter but by the spirit of the tax code around the world.

Last month the Taoiseach Enda Kenny held a private meeting with the Apple CEO Tim Cook in the Cork headquarters where they discussed corporation tax. “I reassured him that ours is a very transparent statutory rate of 12.5% and that will continue,” said Mr Kenny.

In the 2014 Budget Finance Minister Michael Noonan promised to close the stateless tax loophole that Apple had been exploiting.

Senior lecturer in accounting and finance, Dr Sheila Killian said that Mr Noonan’s legislation could hit Apple’s global tax planning.

“It seems from the report that Apple Sales International is an Irish-incorporated company which is not resident here. The question then arises, where, if anywhere, is it resident? And will it be affected by the changes in the last budget for nowhere-resident companies?” she said.


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