Apple pays 2% tax on overseas profit

Apple has paid less than 2% tax on its overseas profits, documents yesterday showed after the iPad and iPhone giant slashed the amount foreign taxmen receive.

Apple paid $713m (€553.4m) in corporation tax outside the US in the year to Sept 29, despite its foreign pre-tax earnings surging more than 50% to $36.8bn (€28.6m), papers filed with US regulators revealed.

The technology giant’s overseas tax rate fell to 1.9%, compared to 2.5% the previous year and a headline corporation tax rate in the UK of 24% and 35% in the US.

The slide in Apple’s overseas tax rate came as the company sold 125m iPhones, 58m iPads, and 13.5m MacBook laptops worldwide, including the US.

The company was not immediately available for comment.

The California-based firm is the latest company to come under scrutiny for making a poor contribution to overseas coffers after Starbucks, Facebook, and Google met similar criticism.

US Coffee-shop chain Starbucks has only paid €35,000 in taxes in Ireland since 2005, while paying €5.7m in royalty and licensing fees to its parent company, accounts filed by the US coffee chain’s wholly-owned Irish subsidiary Ritea Ltd show.

Accounts filed by Ritea — owned by Dutch-based Starbucks Coffee Emea — record a loss every year it has been in operation in Ireland except for 2011, when the company recorded a €524,944 profit on which €34,980 in tax was paid.

And America’s top five technology firms, including Facebook, Amazon, and eBay, legally avoided about £850m (€1,057m) in corporation tax last year, a Sunday Times investigation found.

Companies are able to sidestep the taxman by constructing complex global structures that allow them to move money through offshore havens.

Apple channels much of its business in Britain and Europe through its subsidiary in Cork, The Sunday Times reported.

Apple recorded a 45% rise in turnover to $156bn (€121bn) in the year, helping deliver a 63% rise in pre-tax profits to $55.8bn.

The company paid $13.3bn in federal and state taxes in the US.