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How Apple sidestepped a 2013 crackdown on its Irish tax practices

bbc.co.uk

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Re: How Apple sidestepped a 2013 crackdown on its Irish tax practices

#281

Post by white-flame »

toomuchtodo wrote: post #205
osteele wrote: post #121

Earlier quoted context omitted.

> If you make it clear there will never be a tax holiday, but that you will instead keep adjusting the rules to go after earnings withheld abroad, at some point the rational choice for them will be to bite the bullet and repatriate the income. Another rational choice is to relocate the company, a la Burger King's move to Canada [1,2]. Then the government can counter with tariffs [3,4]. It's a balancing act, though. […

> It's a balancing act, though. At the end of the day, there is no way you as a corporation can entirely subvert a nation state. I find it odd even that rational individuals think its possible against an adversary (typically with effectively unlimited resources) that can tariff you, dissolve your organization, and even jail you.

Large corporations simply have the ability to shop around to figure out which tax/legal jurisdiction they want to incorporate under, and which instruments they choose to represent their incomes, expenses, and holdings. If things like tariffs are implemented, then the cost/benefit situation changes and shopping around resumes. A smaller company or individual often doesn't practically have that scale of flexibility & research to pull off the same changes, though technically they do.

But even in your personal purchasing, because you might shop around and even negotiate prices with sellers to get a good deal, does that make you an adversary of the economy? No, it makes you part of the economic structure, like the various corporate implements are part of various jurisdictions' tax structures, and the governments benefit from their presence in various ways, not just directly through taxes. That's what all the negotiations are based on.

Of course, I'm speaking of options that are legal, and it gets arguable (and sometimes flagrant) how some corporate actions get interpreted in that sense.

Re: How Apple sidestepped a 2013 crackdown on its Irish tax practices

#282

Post by crdoconnor »

mattnewton wrote: post #274
crdoconnor wrote: post #251

Earlier quoted context omitted.

>I'm pretty sure China would be quite happy if the US punishes Apple. That means that their protectionist policy towards Huawei will be even more effective. If the US put onerous taxes on the purchase of Apple phones that might be true. If the US instead just collects a larger share of Apple's profits then Apple is going to go on exactly as before and just not deliver quite as much cash to its shareholders.

Taxing the phone or the company’s margins should have the same effect, right? They’re both costs on apple’s revenue. Barring maybe some enforcement issue or something it makes no difference how you collect it, Apple will pass some of it off to their customers and eat another percentage based on whatever the new cost/demand curve looks like to them.

>Taxing the phone or the company’s margins should have the same effect, right?

Wrong

>They’re both costs on apple’s revenue.

Hardly. Make zero profit and you pay zero tax on that profit.

Re: How Apple sidestepped a 2013 crackdown on its Irish tax practices

#283

Post by __blockcipher__ »

anigbrowl wrote: post #188
__blockcipher__ wrote: post #170

Earlier quoted context omitted.

How about you provide the evidence? If US makes it defacto illegal to operate internationally as a US-based company, the US will lose its economic moat within a matter of decades [citation needed, I know] I’m not a tax expert but IME the people who are blaming Apple don’t know what they’re talking about. Only the US has such an insane attitude towards international profits. And remember that there’s no loophole to cl…

The person making the claim has the burden of proof. Maybe repeating a string of specious arguments that have already been debunked or refuted elsewhere in the thread isn't the best approach for your brand-new HN account.

Debunked/refuted where?

I admit I haven't provided much in the way of evidence. However we're talking about a complicated tax situation so it's hard to stick to the concrete.

Do you agree that the only way to "close the loophole" is to force companies to repatriate their earnings? I don't see another way to address it.

Right now the issue is that iff Apple repatriates its money, it must pay taxes. So Apple has been fulfilling their fiduciary obligations by opting not to repatriate (which would destroy 30%+ of the value, I don't know the actual number but I believe I am being conservative), instead choosing to take on cheap debt domestically to fund share repurchases.

Thus I don't see a "solution" to the "loophole" (obviously I don't believe it's a loophole because it's the law) that doesn't involve forced repatriation.

If there's something wrong with what I've said or something I haven't considered, I'm all ears.

Re: How Apple sidestepped a 2013 crackdown on its Irish tax practices

#284

Post by cc439 »

kobeya wrote: post #138
jjtheblunt wrote: post #89

Earlier quoted context omitted.

No, they couldn't. The money belongs to foreign corporations also named Apple whatever. That little issue is purposefully glossed over for the sake of sensationalism to sell advertising, of course.

Treat income of any foreign company wholly owned or with substantially similar ownership structure of a domestic company as taxable income for that domestic company. I don't think this is a good idea; I'm just demonstrating that it's not impossible.

How do you define "domestic"? Is it a company that earns the majority of its revenues in your country? That won't work because Toyota is certainly not an American company but the US market represents the majority of their revenues. Is it a company that was founded in your country? That won't work because of companies like Airbus that are supranational in origin. Is it a company that is headquartered in your country? That won't work because a headquarters can be moved in a matter of months (look at how GE left CT for a more regional example).

Re: How Apple sidestepped a 2013 crackdown on its Irish tax practices

#285

Post by __blockcipher__ »

Frondo wrote: post #195
__blockcipher__ wrote: post #170

Earlier quoted context omitted.

How about you provide the evidence? If US makes it defacto illegal to operate internationally as a US-based company, the US will lose its economic moat within a matter of decades [citation needed, I know] I’m not a tax expert but IME the people who are blaming Apple don’t know what they’re talking about. Only the US has such an insane attitude towards international profits. And remember that there’s no loophole to cl…

No one is saying the US would make it illegal to operate an international company. They're looking for ways to close some of these loopholes that are keeping a ton of tax money out of the coffers belonging to We the People. Please don't conflate "closing tax loopholes" with "making it illegal to operate internationally".

Please define the specific tax loophole.

The "loophole" as far as I can tell is that a company can choose not to repatriate their earnings, which is completely legal.

Re: How Apple sidestepped a 2013 crackdown on its Irish tax practices

#286

Post by __blockcipher__ »

cmiles74 wrote: post #181
__blockcipher__ wrote: post #157

Earlier quoted context omitted.

Pure foolishness. The law says “if you bring your foreign-earned profits abroad, you must pay taxes”. (I left it vague because I’m not an expert but my understanding is Apple would be responsible for around a 30% or higher tax rate). Apple says, “okay we’re not going to bring the money back at that rate. Instead we’ll leave it invested in liquid assets abroad and take on cheap debt in the US to fund our share repurch…

I don't think it's at all that straightforward. Apple has assigned intellectual property to their subsidiaries in Ireland and has used that as a way to direct profits out of the US. Is that legal? I am not an expert, but surely it is not straightforward. Once profits collect in Ireland, Apple moves the profits to it's "head office", which not only is not in Ireland, it's not physical in any way. Thus they avoid the b…

Which issue are we discussing? The age old double dutch irish or whatever it's called, or tax repatriation?

I surmise that you're stating that the two are linked. That's fair. However isn't Apple already paying taxes on its US-sold goods?

This thread seems to specifically be about the repatriation side of things, and the only way to force repatriation is to...force repatriation.

Re: How Apple sidestepped a 2013 crackdown on its Irish tax practices

#287

Post by jnordwick »

pbhjpbhj wrote: post #97
mistercow wrote: post #7

Earlier quoted context omitted.

I'm always skeptical when someone precedes "close the loophole" with the word "just", especially when the entity searching for loopholes has hundreds of billions of dollars in cash. Closing loopholes is good, but they'll almost certainly find another one.

You can close all loopholes that rely on literal interpretation by changing the approach to interpretation of the law/tax code. You can reinforce it with minimum taxation based on revenue, which prevents you having to wade through treacle in the courts.

Taxing revenues means taxing products on every step in production, many many times on their path through production and the economy. You would essentially also destroy low margin businesses, like grocery and retail and Adobe they ate such low margin the entire tax bill would be paid by the end consumer.

Re: How Apple sidestepped a 2013 crackdown on its Irish tax practices

#288

Post by __blockcipher__ »

nautilus12 wrote: post #71
whatok wrote: post #15

Earlier quoted context omitted.

Pretty sure Apple is following existing tax laws.

mrguyorama I agree 1000% and most reasonable people should as well. The technical letter of the law should not matter as much as the spirit of the law!

The spirit of the law is not clearly defined. In fact, by definition it means "person X's interpretation of what the law was trying to achieve".

How could that be the basis for an intelligent taxation system?

Re: How Apple sidestepped a 2013 crackdown on its Irish tax practices

#289

Post by csomar »

I think the clash between globalization and countries (sovereign governments) is just being delayed for no good. It is proving more and more that globalization doesn't work with sovereign governments.

Case in point: Let's say the US government gets strict with Apple and taxes it heavily. Apple already produces its iPhone hardware in China. Its sales are derived from the whole world and the Chinese market might become bigger than the American one. So Apple could just move to an off-shore jurisdiction that is out of hand of the US government.

Boom. Apple escapes the US tax penalty. They might even be able to carry on their US engineer development while being listed as a Hong Kong or Singapore company. The only way to stop that, is for the US to pressure these smaller off-shore city-states.

But smaller and other non-major countries can't do that. So big corporations will be able to screw them. In the end, you'll either end up with weak governments which end up breaking down under the negative financial effect; or have the US rule the world "fiscally".

It seems that we are going for the latter: https://en.wikipedia.org/wiki/Foreign_Account_Tax_Compliance...

Re: How Apple sidestepped a 2013 crackdown on its Irish tax practices

#290

Post by tialaramex »

cozzyd wrote: post #151
mistercow wrote: post #7

Earlier quoted context omitted.

I'm always skeptical when someone precedes "close the loophole" with the word "just", especially when the entity searching for loopholes has hundreds of billions of dollars in cash. Closing loopholes is good, but they'll almost certainly find another one.

Clearly we need stochastic regulations, where the regulations are chosen randomly from time to time subject to the constraints that they accomplish their policy goals. Just have to change them faster than the accountants can figure out how to exploit them...

Several places have what's called a "General anti-avoidance rule". The way this works is, if you think you've got a brilliant wheeze that avoids taxes, you're required to tell the tax officials about it. If you choose not to tell them then they can prosecute for evasion, and if you tell the court actually it was a clever avoidance tactic not evasion the court says hang on, why didn't you obey the General anti-avoidance rule? So you're screwed either way.

On the other hand if you tell them, they get to look at your clever idea and decide to either allow it, change the rule for next year, or go to court saying you're wrong this avoidance method doesn't work so you owe taxes.

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