Apple CEO Tim Cook refused to apologize this week for the company’s controversial tax strategy, which through use of Irish subsidiaries is known to save the company billions in US tax contributions every year. He also stated to lawmakers that Apple’s stance is one that supports tax reform for corporations, regardless of whether the result is larger taxes.
According to the Senate Permanent Subcommittee on Investigations, Apple was able to sidestep US tax bill totaling over $9 billion during 2012 alone, having implemented an international tax strategy lawmakers claim treads the line between immoral and illegal. In response to the allegations, Cook was adamant to remind lawmakers and the US as a whole that Apple is already a massive contributor to the national economy, having pumped at least $6 billion back in during the same 2012 tax year.
“We expect to pay even more this year,” said the CEO. “We pay all the taxes we owe.”
Subcommittee chairman Senator Carl Levin however has a rather different take on Apple’s insistence of generosity, claiming that Cook has found no less than the “Holy Grail” for avoiding taxes that should in fact be paid. Apple has created a unit in Ireland that doesn’t pay any taxes on income to any government and hasn’t for at least five years.
According to Levin, Apple’s decision to use Ireland as the center-point for its tax avoidance strategy came after striking a deal with the country’s government to pay corporate taxes of under 2%. By contrast, corporate tax for top-level businesses in the US is one of the highest in the world at 35%.
“We don’t move intellectual property offshore and use it to sell our products back to the United States to avoid taxes. We don’t stash money on some Caribbean island,” was Cook’s response to the allegations of exploitation.
Curiously, the Irish government has also gone on record to deny making any deals at all with Apple and instead blaming the firm’s exceptionally low taxation rate on the way it is managed abroad.
And according to Jay Carney speaking on behalf of Barack Obama, the President remains adamant that “it is inexplicable that our tax code would actually be written in a way that rewards companies for taking jobs and profits offshore.”
Despite the allegations of immoral dealings and strategies, Apple has so far been found not to have breached any national or international laws and have offered full cooperation throughout the investigation.
Though perhaps the most high-profile example to date, Apple is far from the first American technology brand to be accused of large-scale tax avoidance. In recent years, both Microsoft and Hewlett-Packard have faced similar inquiries for adopting similar strategies to those Apple is accused of using today.
As far as Senator John McCain was concerned, Apple’s success in business in commendable but the recent revelations have proved just how imperfect the US taxation system is.