Monday, 5 November 2012
So Apple join the list of US companies who are accused of Tax avoidance when it was revealed that they paid less than 2% tax on profit made outside the United States last year.
The iPhone and iPad maker paid $713m (£445m) in overseas corporation tax on foreign profits of $36.87bn (£23bn) in the year to the end of September. That translates as a tax rate of 1.9%, compared to a headline corporation tax rate of 35% in the US and 24% in the UK.
The details were revealed in Apple's 10K filing with the US Securities and Exchange Commission (SEC).
Of course Apple has not broken any laws by arranging its tax payments this way, but together with Google, Amazon and Starbucks it reflects t the astonishingly small amount of tax US multinationals pay in the U opposed to what they pay in the US itself
Analysis by the Guardian found that Google, Amazon, Starbucks and Facebook have paid just £30m in tax over the past four years despite generating more than £3.1bn in sales.
Apple may pay some income taxes on its profit to the country in which it sells its products, but it minimizes them by using various accounting moves to shift profits to countries with low tax rates. For example the strategy known as "Double Irish With a Dutch Sandwich," routes profits through Irish and Dutch subsidiaries and then to the Caribbean.
Other multinational corporations also use such tax techniques, which are legal but hardly ethical.
But even so Ireland charges 12.5%, compared with Britain's 24%.
It is time the UK government act and start closing these loopholes and this means that the European Union must also ensure that companies pay the appropriate tax in the countries where they are clearly operating,
One means could be to have a unified corporation tax rate Tax system throughout the EU but this is unlikely to happen, and nations should have the right to set their own Tax rates anyway.
But that doesn't mean that companies should be able to claim to be operating from another country when they clearly have a substantial base in another.
A simple rule could be that a company that has a given percentage of Stores or employees per population in a EU state should deemed to be operating from that country and pay that countries corporation tax rate there .
These companies who like to claim to be ethical are behaving like old time colonialist thinking the rules do not apply to them.
In some cases like Starbucks they are helping to put small independent companies out of business as they cannot compete with a multinational when they have to pay Tax and the big boys seem to appear they don't have to.
Of course the major Parties will all claim that they are appalled by this and will claim that they are seeking to take action but this has taken place under the governance of Labour as well as the Conservatives (and their new Lib Dem partners) who are in thrall to these companies.
We need action on this now and the government should concentrate its efforts on ending Tax avoidance instead of attacking the welfare state and using the poor and dispossessed as a Scapegoat for the countries financial woes caused by their Tax avoiding friends.