Yes, the Apple tax thing has come out again, with the disclosure of the Paradise Papers. Apple has taken the somewhat unprecedented step of issuing a long statement about taxes.
They’re not really breaking any laws (though there are few transnational laws that govern this sort of thing), but it’s worth noting one inconsistency in Apple’s statement. The company says (and in bold):
The vast majority of the value in Apple products is created in the United States, where design, development, engineering work and more are accomplished
They say this in order to defend their use of offshore tax shelters to hold on to the money until they can convince the US Congress to let them repatriate the money at a discount. Yet later they say:
Apple has cash overseas because that’s where it sells the majority of its products
And there’s the rub. If you are a company making widgets, and you don’t sell them directly, you sell them through distributors, and they in turn tell your widgets to retailers, who sell to end users. Lets say you sell your widgets at 50% of their retail price; the local distributors and retailers earn the rest of the money, and pay taxes on it.
But since Apple sells most of their products directly, either through their own store, their online store, or their subsidiaries, they are able to retain much more of the total price of their goods. If the company were to book the value of each item they sell as a wholesale price, due to Apple Inc in the US, and the remainder as money generated locally (through their local subsidiaries), this would be fair. (No one thinks that Apple should pay taxes on the full profit they earn from selling iPhones in any country outside the US. Everyone recognizes that the products are designed in the United States, and that a certain amount of their value comes from that country.)
Because that’s exactly how they sell; they have a local subsidiary (one per country for the largest countries, one per region for certain regions), and they have retailers that they own in many countries that sell to end users.
This is how Apple is stiffing the non-US countries where they sell (and it’s not limited to Apple; more and more US companies are using this trick to not pay local taxes), and it’s simply unfair. Why should Apple not have to pay taxes to cover, for example, the roads, trains, and other infrastructure that allow them to sell in a given country? Yes, they pay VAT – which is something they merely collect for the government – but why should they be able to avoid paying income tax on items they sell in a country, where the “value” is partly the ability to sell it in that country? Apple is taking money from countries where they sell their products, but they are not contributing to the educational systems, to the justice systems (which they rely on), or to the well-being of the countries where there customers are. It’s simply not fair.
One note about this statement:
As the largest taxpayer in the world we’ve paid over $35 billion in corporate income taxes over the past three years, plus billions of dollars more in property tax, payroll tax, sales tax and VAT
This statement is manipulative; sales tax and VAT are not taxes that Apple pays. These are taxes that companies collect for the government and then pass on. They do not pay sales tax or VAT out of their profits; it’s not an expense for the company. It’s money in that equals money out. (Sales tax is different from VAT, and Americans often don’t know what VAT is. Here’s an explainer, if you’re curious about the difference between the two.)