Apple’s cash “mountain” and their mole hill of a tax bill

Have you ever wondered why the large corporate companies like Apple manage to record such large profits? The simple answer is that they filter their profits into tax havens to avoid local taxes.

Recent articles have announced that Apple is also sitting on billions of dollars in offshore accounts which they can’t use otherwise they would incur substantial tax payments.

Incidentally, compared to other nations their tax payments are not that substantial – I think it is only about 9% - 10% corporation tax if those funds were to be repatriated (as I read in the FT). But what is interesting is how the situation has been allowed to happen. Why on earth do the authorities create tax laws which are so complicated that they actually motivate businesses to have complex corporate structures?

I fear our current tax policies in the UK suggest that some corporate businesses are using tax avoidance schemes even though the tax rates are relatively low. Most of our clients would be delighted to have such a low tax rate and enjoy the benefits of the profit that they make. Good old fashioned advice would always be to consider the benefits for your business and then consider the tax implications – never do a deal for tax reasons alone; business first and then tax

As always, we enjoy hearing from you, so join the conversation by leaving your comments below.


Comments


Graeme K | 24 May 2013

The problem is not that Apple or Starbucks, Google et al are doing anything illegal, rather the problem is the mass of complex rules permit this if you can structure things in the right way. The rules need to be simpler and applied consistently across all jurisdictions. Ireland for example has give lots of tax breaks to encourage companies to base their business operation there - which is good for their economy but because the corporate residency rules are different between Ireland /US Apple cash be resident nowhere. Get the rules sorted. Any company that does not minimise (legally) its tax bill is being negligent unless it knowingly overpays for other reasons.


A. Ashenden | 16 May 2013

Interesting that the majority of tax havens are UK protectorates!!


J. Lewis | 16 May 2013

Companies trading in the UK but not registered here should be required to charge VAT on their outputs at 30% instead of 20%.


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