Beta
×

Welcome to the Slashdot Beta site -- learn more here. Use the link in the footer or click here to return to the Classic version of Slashdot.

Thank you!

Before you choose to head back to the Classic look of the site, we'd appreciate it if you share your thoughts on the Beta; your feedback is what drives our ongoing development.

Beta is different and we value you taking the time to try it out. Please take a look at the changes we've made in Beta and  learn more about it. Thanks for reading, and for making the site better!

Apple To Be Investigated By the EU Over Tax Affairs

Unknown Lamer posted about 5 months ago | from the coffers-running-dry dept.

EU 155

mrspoonsi (2955715) writes "The European Commission is to open a formal investigation into Apple, Starbucks and Fiat in relation to tax arrangements with three EU countries. The firms' arrangements with Ireland, the Netherlands and Luxembourg will be investigated. Announcing the move, tax commissioner Algirdas Semeta said that 'fair tax competition is essential.' Last year, a US Senate investigation accused Ireland of giving special tax treatment to Apple. The European Commission will look at whether the companies' tax affairs breach EU rules on state aid. Competition Commissioner Joaquin Almunia said: 'In the current context of tight public budgets, it is particularly important that large multinationals pay their fair share of taxes.' Countries in Europe cannot allow certain firms to pay less tax than they should, Mr Almunia added."

Sorry! There are no comments related to the filter you selected.

Click bait ? (1, Insightful)

Anonymous Coward | about 5 months ago | (#47211623)

Why single out apple in the heading?

Re:Click bait ? (0)

Anonymous Coward | about 5 months ago | (#47211845)

So, the EU doesnt like it that three countries decided to control their own tax laws, and USA says it doesn't like how other countries undercut its corporation tax? Like like it? Then change our tax rates and/or the laws.

Re:Click bait ? (4, Informative)

Richard_at_work (517087) | about 5 months ago | (#47211863)

Because its much much much larger than the other two companies mentioned, and the fact that Apple is directly named is of more interest to us tech geeks here on Slashdot than either Starbucks or Fiat...

Re:Click bait ? (1)

just_another_sean (919159) | about 5 months ago | (#47212321)

Not to mention they were the ones recently accused of the same thing by the US. The other two were not investigated by the US, just Apple.

Re:Click bait ? (1)

ganjadude (952775) | about 5 months ago | (#47212023)

if i had to guess its because apple is tech, and fiat and starbucks are not

and clickbait, cant forget the clickbait

Re:Click bait ? (1)

ArcadeMan (2766669) | about 5 months ago | (#47212147)

But Starbucks has apps, wi-fi, etc...

What do you mean, "they sell coffee"?

Re: Click bait ? (1)

jd2112 (1535857) | about 5 months ago | (#47212441)

The tech industry runs on coffee. (As do most others)

Re: Click bait ? (1)

davester666 (731373) | about 5 months ago | (#47213707)

exactly. nobody wants to talk about their drug dealer.

Re:Click bait ? (1)

Megol (3135005) | about 5 months ago | (#47212445)

Because this is a tech website and the other ones listed aren't tech companies? Because Apple in many ways are rapidly approaching monopoly positions in manufacturing and some tech development?
Because why not, people will complain anyway?

yeah, tell them to send the money back home! (1)

swschrad (312009) | about 5 months ago | (#47212637)

don't hide it any more in the pristine EuroCenter!

Re:Click bait ? (1)

Dragonslicer (991472) | about 5 months ago | (#47213189)

Why single out apple in the heading?

Did you even read your own subject line?

It's about time (3, Insightful)

Anonymous Coward | about 5 months ago | (#47211625)

They shouldn't forget the other big IT companies - Google, Facebook, etc.

Re:It's about time (0)

Anonymous Coward | about 5 months ago | (#47211651)

We need to start cracking down.

We need to start cracking down on the giant corporations who have squadrons of lawyers and accountants tasked with doing nothing but avoiding their tax obligations. We need to start sending people to prison. Hey, corporations are people too, right?

And how long has there been an apple.slashdot.org? Apple gets their own section of slashdot? Harrumph.

Re:It's about time (0)

Anonymous Coward | about 5 months ago | (#47211727)

Since at least February 2002.
        http://web.archive.org/web/20020215000000*/http://apple.slashdot.org

Re:It's about time (0)

Anonymous Coward | about 5 months ago | (#47211765)

Nations need coherent tax laws without loopholes. Lawyers can only prosper in the tangled web of duplicity that makes up modern legislation, burn that away and the number of lawyers won't matter.

You can read everything as "vodka.slashdot.org" the first part doesn't matter unless it's "beta" which cues the use of the ugly UI option.

Re:It's about time (0)

Anonymous Coward | about 5 months ago | (#47211815)

You seem to be forgetting who writes the laws, including the tax laws.

Lawyers.

Re:It's about time (1)

Anonymous Coward | about 5 months ago | (#47211897)

Nations need coherent tax laws without loopholes.

You're assuming that what's happening in Ireland is a tax loophole and is not, instead, the system working exactly as they intend it to. If there were loopholes, they would have fixed them by now. No, this is the system working exactly as intended.

Or, when you declare various expenses when filing your taxes to reduce your tax burden, do you consider those deductions to be tax loopholes as well?

System working as intended. This investigation will result in nothing other than a handful of politicians getting their name in the news as being hard on business. PR move and nothing more.

Re:It's about time (0)

Anonymous Coward | about 5 months ago | (#47212425)

System working as intended. This investigation will result in nothing other than a handful of politicians getting their name in the news as being hard on business. PR move and nothing more.

You are forgetting a thing here.
In this case the ones investigation the issue aren't the ones who benefits from it.
EU is very capable of fining both Apple and Ireland in this case. Apple have neglected to pay taxes in the other nations. I can't imagine that they let it slide.

Re:It's about time (1)

Anonymous Coward | about 5 months ago | (#47213023)

Back in the eighties Ireland was quite poor and had high unemployment and was trying to develop US foreign direct investment with the help of the US. The loophole that Apple is taking advantage of is that according to US tax law you pay tax where the company is headquartered and with Irish tax law you pay tax where the company is managed from. So Apple ends up paying tax to neither country. I wouldn't be surprised if that Irish tax law was introduced back then in the eighties and the Irish and the Americans were hoping no-one would notice. Apple is also registered as an unlimited company in Ireland so it can keep it's financial records private.

Re:It's about time (0)

Anonymous Coward | about 5 months ago | (#47214381)

Sort of...

In this case it is two different laws creating a loophole. While technically legal (the best kind).

What you are talking about a tax exemptions which are explicitly written into the laws. Those can be turned into loopholes (as in this case).

A loophole is typically a side effect of abuse of the existing laws. So they are legal, but accounty trickery.

Most loopholes come from exemptions. Exemptions are by their very nature a way to reduce tax burden for a particular class of people (usually for social, political, or job creation reasons). Loopholes are produced when someone figures out a combination of exemptions to further reduce their tax burden than what was intended by the law makers. For example lets say one law lets me take an exemption for spending some money. Then another law lets me do the same thing again because I happen to own a blue car that has 4 green wheels and a yellow spare. I can then double dip on the exemptions say doubling the amount of money I can deduct from my taxes. Even though technically there was only 1 pile of money. In some cases you pile up enough of these double dips the gov pays you to make money. That is at its heart a loophole.

Unless the deductions specifically say 'if you deducted something else this way you can not do it'. As usually the laws are written at different points in time by different people. Sometimes the loopholes are intentionally created for specific people. Or accidentally because the tax codes of all the countries out there is quite expansive and together create very complex system.

I do agree with you however it is working exactly as intended. It is why Steve Jobs helped Ireland set it up that way and the US the other way.

You are also right about the outcome. Nothing will happen, as it is all legal. Even if they force Ireland to change its laws I am sure there are 2 dozen other countries that could step up to the plate...

As an aside I wonder if the tax code of the world would be considered Turing complete? Or just an automation system.

Re:It's about time (0)

larry bagina (561269) | about 5 months ago | (#47211933)

Congress/Parliment/etc write tax laws. If companies (or other people) follow the rules to minimize their tax burden, is that bad? Exemptions and credits exist to encourage that! Don't blame the player, blame the game.

Re:It's about time (0)

Anonymous Coward | about 5 months ago | (#47213065)

When it is lobby groups that have said tax "loopholes" created in the first place, do you still blame the game?
(the player is the game).

Re:It's about time (-1)

Anonymous Coward | about 5 months ago | (#47211975)

This is the EU telling EU countries that they cannot use tax incentives to compete with each other to attract business. Apparently the job of the Competition Commissioner is to stifle competition.

Its like if the US federal govt had the balls (much less the authority) to tell US states that they had to all have the same tax rates and couldnt use tax incentives to attract business from other states. Its fucking absurd.

Re:It's about time (2)

gbjbaanb (229885) | about 5 months ago | (#47212035)

no, the job of the competition commissioner is to stifle competition amongst EU member states so the EU as a whole benefits. His job is to encourage competition amongst companies operating here.

Big difference between a company and a country, especially when those countries are supposed to be part of a single federal superstate (whoops, might have given away a secret known only to the EU commission there!)

Re:It's about time (1)

hcs_$reboot (1536101) | about 5 months ago | (#47213857)

They shouldn't forget the other big IT companies - Google, Facebook, etc.

Since when Facebook is an IT company?

Re:It's about time (1)

Bing Tsher E (943915) | about 5 months ago | (#47214597)

These days writing a web page gets considered 'coding' by some people. Let it go.

Apple is a wealth extraction engine (3, Insightful)

i kan reed (749298) | about 5 months ago | (#47211641)

They're very diligent about keeping tax costs low and manufacturing costs very low. They use marketing and image to keep prices high. They pump as much money out of the middle class and as little as possible into the (world) lower class.

Nominally, that's supposed to be how businesses work, but in that same nominal world, competition is supposed to bring prices down. Apple is the clearest example of how marketing and branding are tools to keep that from happening.

Re:Apple is a wealth extraction engine (-1, Flamebait)

Anonymous Coward | about 5 months ago | (#47211751)

Thanks for your expert analysis. Where is your degree from, the University of Mom's Basement?

Re:Apple is a wealth extraction engine (3, Insightful)

Anonymous Coward | about 5 months ago | (#47211811)

Nominally, that's supposed to be how businesses work,

Yes.

but in that same nominal world, competition is supposed to bring prices down.

Yes, but it also brings purchasing power down, so there's an abundance of crap that only a minority can afford, and workers have to struggle ever harder to survive. Although his rants about revolution are without evidential basis, Marx's predictions about capitalism have mostly turned out correct.

Anyone who finds their life getting easier - hell, anyone like me with the luxury of being able to post on /. on a weekday morning/afternoon - is part of a tiny minority. We could pretend that hard work got us up there, or we could acknowledge the unusual social and (I expect in many cases) intellectual advantages that we enjoy.

Re:Apple is a wealth extraction engine (2)

drinkypoo (153816) | about 5 months ago | (#47212045)

competition is supposed to bring prices down.

Yes, but it also brings purchasing power down,

But it also brings effective purchasing power up by bringing costs down, which in a healthy and competitive market results in prices falling still farther. No, what reduces purchasing power is the decreasing share of profits being given to the worker. Worker productivity has increased, but worker compensation in real money (adjusted for inflation) or as a share of profit has decreased for many decades running.

Anyone who finds their life getting easier - hell, anyone like me with the luxury of being able to post on /. on a weekday morning/afternoon - is part of a tiny minority.

While true, this is not a supporting argument to your point.

Re:Apple is a wealth extraction engine (0)

Anonymous Coward | about 5 months ago | (#47213175)

Worker productivity has increased, but worker compensation in real money (adjusted for inflation) or as a share of profit has decreased

And this is the result of competition ethic: ever decreasing marginal profit on production in a consumer-driven society, so that labour effectively becomes worthless except under economy of scale, where scale can only be achieved by the owners of capital.

Re:Apple is a wealth extraction engine (1)

khallow (566160) | about 5 months ago | (#47212817)

Marx's predictions about capitalism have mostly turned out correct

Sure they have.

Here's what brings down purchasing power: six billion more people who can do your job. Supply and demand applied to labor completely explains what has happened to the developed world over the past fifty or so years. You don't need a 19th century kook to think this through.

Re:Apple is a wealth extraction engine (0)

Anonymous Coward | about 5 months ago | (#47214233)

(not the same AC)

Sure they have.

Here's what brings down purchasing power: six billion more people who can do your job. Supply and demand applied to labor completely explains what has happened to the developed world over the past fifty or so years. You don't need a 19th century kook to think this through.

Actually, you do need that kook. Supply and demand wouldn't explain the emergence and growth of the welfare state in the last fifty or so years (and longer)

It took a kook like Marx to popularize the idea that if supply and demand is not in your favor, you should try to control it (as in controlled markets) and force it into your favor.

Marxism and the idea of government controlling markets rose around the same time as the US Civil War (the Manifesto came out in 1848, Das Capital in 1867). It just so happens that the Civil War marked the beginning of government growing larger and taking more control over the economy. It may look small compared to today, but things like Reconstruction, income taxes, and the transcontinental railroad were quite progressive and large at the time.

Re:Apple is a wealth extraction engine (1)

Bing Tsher E (943915) | about 5 months ago | (#47214657)

Political Economy is much bigger than Marx. He had contemporaries even in that same period whose writings and observations are at least as relevant.

All that Marx inspired was a significant uprising of rabble. Also, political economists describe reality. They don't define it.

Re:Apple is a wealth extraction engine (0)

Anonymous Coward | about 5 months ago | (#47215447)

Political Economy is much bigger than Marx. He had contemporaries even in that same period whose writings and observations are at least as relevant.

Which is why I said a kook LIKE Marx, and not attribute it all to him alone.

All that Marx inspired was a significant uprising of rabble.

If that's all he did, he's done a lot. The rabble are usually useful idiots for the ruling elite, favoring the status quo. Getting them to turn against the elites and status quo of the time is quite an accomplishment.

Also, political economists describe reality. They don't define it.

Sure, Marx described reality as he saw it. He also made predictions, a type of description. I only said he popularized certain ideas. Popularizing something doesn't mean he defined reality.

Re:Apple is a wealth extraction engine (1)

EuclideanSilence (1968630) | about 5 months ago | (#47211851)

...competition is supposed to bring prices down. Apple is the clearest example of how patents awarded for every stupid idea are tools to keep that from happening.

I completely agree.

Re:Apple is a wealth extraction engine (1)

i kan reed (749298) | about 5 months ago | (#47212109)

There's definitely an aspect to that too. I shouldn't have been so 1 dimensional.

Re:Apple is a wealth extraction engine (1)

gnupun (752725) | about 5 months ago | (#47212825)

Of course you agree (the whole anti-IP crowd is here). But only some of those patents are stupid, the rest are worthy of patent protection.

Re:Apple is a wealth extraction engine (2)

EuclideanSilence (1968630) | about 5 months ago | (#47213337)

If the majority of patents are anything but stupid, why is prior art such a big deal? Why is "first to publish" such a race? If a creation is truly novel, then prior art or simultaneous publication should be an amazingly improbable newsworthy coincidence.

Patents are based on the idea that what you invent is non-obvious. I guess no one ever told most of the anti-free-competition crowd, but no matter how smart you are, there is always someone smarter. Nothing you create is non-obvious to everyone else. You simply aren't that magnificent of a person, no matter what the patent office tells you. If we really wanted to enforce non-obvious patents, there would be a law that no patent using technology created in the last 20 years is allowed to be used in a patent.

But that's not why patents continue. The reason patents survive today is because fake-entrepreneurs want to make money by buying a piece of the economy and suing anyone who competes with them. Listen to any meeting for an inventor looking for investors. The #1 make-it-or-break-it question is "have you secured IP rights for your product?". If the answer is "no", then consider yourself out of luck. Entrepreneurs don't want the trouble of having to compete. They want to buy a piece of the market, and sue anyone who dares to compete. Running a company and keeping up to date with progress is too troublesome.

Entrepreneurs used to be well informed businessman and managers. Now they are just Barons and Lords who use force to stifle competition.

Engineers hate patents. Software designers hate patents. Jonas Salk, the hero who eradicated polio saved a good portion of the world by avoiding patents. The only people like patents are lazy investors, and that's only because they profit by crippling progress.

Re:Apple is a wealth extraction engine (1)

gnupun (752725) | about 5 months ago | (#47213927)

Why is "first to publish" such a race? If a creation is truly novel, then prior art or simultaneous publication should be an amazingly improbable newsworthy coincidence.

Sometimes highly innovative things can be envisioned by multiple individuals at the same time. 2 or 3 divided by 7 billion is still highly improbable.

Entrepreneurs don't want the trouble of having to compete. They want to buy a piece of the market, and sue anyone who dares to compete. Running a company and keeping up to date with progress is too troublesome.

That's inaccurate. Entrepreneurs don't want to do free R&D for their competitors. When a product succeeds in the market, inevitably, competitors will sprout up to gain a pie of the product's market share. The competitors will try to clone the successful product and well, if the product's innovative parts are not protected by patents, the clone will be created and will destroy or weaken the innovator, financially.

In effect, it is cheaper (both in terms of brain power and financial power) to copy a successful product than create it yourself, which is cheating (because you're profiting from someone else's work without compensation). The patent system exists to prevent cheaters from winning.

Entrepreneurs don't want the trouble of having to compete.

I would argue it's the competitors who don't want to compete fairly that want patents removed. They want access to other people's work without paying a dime.

Re:Apple is a wealth extraction engine (1)

RLBrown (889443) | about 5 months ago | (#47211923)

Ideally, competition based on quality to price ratio in each market niche is how business should work. But every business man on the planet would happily embrace monopoly if it is his own monopoly. Capitalism is not about competition, it is about control. Against that, John Q Citizen has to depend on civil regulations to keep product standards high, and financial practices honest, for example, minimum wage standards, lemon laws, safety and health standards. But, what would happen if the USA had a minimum wage law that said a USA company must pay at least $xx.xx/hour to any wage earner, regardless of that earner's citizenship or geographical location? We would be smoked by China corporations, that's what would happen. The best we can hope for is that a manufacturer will, despite capitalistic pressure, take some personal pride in the design of its products. Oh Wait, that is Apple.

How do opinions like this still exist... (3, Interesting)

Black.Shuck (704538) | about 5 months ago | (#47212105)

In the face of the last 17 years of Apple's progress?

Does software write itself? Services? Store-fronts and their employees? How about hedging against future competition or cannibalisation? Against mistakes like MobileMe or exploding batteries? Against patent-wars with similarly well-endowed companies? Will the time come when they don't sell any more kit because everyone is too satisfied to bother upgrading anymore? Was the last WWDC Keynote an absolute firecracker because of the excitement over the new APIs, or a squib because they didn't announce an iWatch or a TV?

You hardware guys are weird.

Re:How do opinions like this still exist... (2)

Rob Y. (110975) | about 5 months ago | (#47214049)

No. Software is written, in the case of Apple, by programmers in the U.S. Then the resulting code magically becomes 'owned' by an Irish subsidiary that exists just to own this code and prevent that component of Apple's products from being taxed. I don't even think any money is transferred from the Irish subsidiary to US Apple which might count as income in the US. It's all a fiction to avoid taxation - which in turn requires the rest of us to pick up the slack.

Re:Apple is a wealth extraction engine (1)

synapse7 (1075571) | about 5 months ago | (#47212153)

Apple lawyers to EU: Resistance is futile. You will be assimilated.

Re:Apple is a wealth extraction engine (2)

L4t3r4lu5 (1216702) | about 5 months ago | (#47212219)

Your user ID is small enough to remember that the Borg icon was reserved for Microsoft stories.

If I was going to use any vivid imagery for Apple lawyers, it would be Tony Montana sat at his desk with a small mountain of Bolivian Marching Powder in front of him.

Apple is a wealth GENERATION engine (3, Informative)

roman_mir (125474) | about 5 months ago | (#47212619)

As always when it concerns the economy /. is mostly full of complete nonsense. Apple is a wealth GENERATION engine, no iPhones, no iPads etc. are taken from anybody by Apple and 'extracted', they are created by Apple and then redistributed into the population. As per usual the socialists completely miss the entire point of the economy and of free market capitalism, which is the engine that produces wealth at the rate higher than any other methodology ever discovered by humans on this planet.

When a company creates new products it creates the wealth. In fact the entire point of a company to combine scarce resources in such a way as to produce maximum amount of wealth at the minimum expense and Apple is EXCELLENT at it obviously, otherwise they wouldn't be where they are.

Extraction is what governments do, not productive businesses.

Re:Apple is a wealth GENERATION engine (2)

i kan reed (749298) | about 5 months ago | (#47213059)

Yes, this is the politically correct interpretation according to libertarians.

It's wrong though. The actual wealth generation occurs in some factory in Beijing.

Re:Apple is a wealth GENERATION engine (0)

Anonymous Coward | about 5 months ago | (#47213723)

Just because your religious leaders tell you so, does not make it to be so. Tell us this - who benefits when apple cheats on their taxes? Similarly, what have they done that should entitle them to pay less in taxes than their employees?

You can come here and paraphrase your favorite scriptures all you want, but that doesn't mean that your argument is based in factual reality.

wait, what? (1)

Anonymous Coward | about 5 months ago | (#47213771)

how, exactly, does apple generate wealth? you told us before that the world only has a constant amount of wealth - by way of your reciting your favorite scriptures about the infinite wisdom of the gold standard. hence unless apple is involved with the creation or extraction of gold, it is physically impossible for them to create wealth.

what kind of punishment will your religious leaders pass down upon you for this blasphemous speech?

Re:Apple is a wealth extraction engine (1)

NetNed (955141) | about 5 months ago | (#47213429)

Why should Apple or any other US company be responsible to "pump money in the the (world) lower class"? Is Toyota or Sony pumping money in to the US lower class?

Re:Apple is a wealth extraction engine (1)

i kan reed (749298) | about 5 months ago | (#47213451)

It's not "responsible" for anything. It's just a symptom of a broken system.

Re:Apple is a wealth extraction engine (1)

TechyImmigrant (175943) | about 5 months ago | (#47213813)

> They use marketing and image to keep prices high.

They make some nice laptops too.

nations need to reform their tax policies (0)

alen (225700) | about 5 months ago | (#47211743)

some countries like the USA tax all the worldwide income of a company like apple and google
its impossible for any company to be in compliance with the law in every nation they operate in if they have to pay 30% taxes on all of their worldwide income to each of a half dozen countries

troll or SUPERtroll? (1)

Thud457 (234763) | about 5 months ago | (#47211833)

What we need is a uniform global taxation scheme so these corporate people can't slip through the cracks between countries. I say the UN should set up a bureau enact such a regimen.

Re:troll or SUPERtroll? (1)

Impy the Impiuos Imp (442658) | about 5 months ago | (#47211991)

I weep on the day such a thing occurs and people can no longer vote with their feet to flee oppressive or confiscatory tax rates.

You may know them by their nom de du gerre, "their fair share".

Re:troll or SUPERtroll? (2)

ganjadude (952775) | about 5 months ago | (#47212067)

the last thing we need is 1 global system. the UN would be the worst group to even consider. we dont need a N.W.O., we need choice, and if everyone on the planet is under the same rules of law, we as a species are doomed to slavery to those who run the N.W.O.

Re:troll or SUPERtroll? (0)

Anonymous Coward | about 5 months ago | (#47212241)

we dont need a N.W.O., we need choice, and if everyone on the planet is under the same rules of law, we as a species are doomed to slavery to those who run the N.W.O.

And yet, America is leading the charge in ensuring every country in the world gets absurd, US friendly copyright laws on the books, all to benefit multinationals and strip us of existing rights.

Through their economic imperialism, the US is doing more to make us slaves to our corporate overlords than any single country.

Because America is the enemy of personal freedom, and the champions of the NWO in the form of the oligarchies they're trying to create.

And idiot Americans sit around thinking they're the keepers of Truth, Justice, and Freedom.

Re:troll or SUPERtroll? (1)

ganjadude (952775) | about 5 months ago | (#47212651)

dont disagree with you one bit as an american even. But it doesnt mean I want to see the EU become the other america when it comes to telling the world what to do . I think the EU had a good goal, but I think in the end the concept of the EU is bound to fail

Re:troll or SUPERtroll? (0)

Anonymous Coward | about 5 months ago | (#47213543)

You do business, ANYWHERE in the world, you pay taxes- what's so hard to understand about this? No company should be able to sideline their tax liability no matter where they do business. I'd prefer a world-wide tax system so all companies are treated equally and its not accountancy magic like Apple's that makes them unique. They should have to pay the same rate as everyone else. Don't like it? Don't go into business, its quite simple.

Re:troll or SUPERtroll? (1)

alen (225700) | about 5 months ago | (#47212171)

yeah, it's called taxing only the goods and services sold in your country. lots of countries have this

Re:nations need to reform their tax policies (1)

gbjbaanb (229885) | about 5 months ago | (#47212113)

Maybe the US has to say to each company, you have to pay 30% tax as that's our standard for US-based companies, but if you've already paid that elsewhere, show us and we'll give you a refund equal to what you paid. So they end up paying 30% to someone.

Trouble is, they just set up shell companies that are subsidiaries and say we made no money to pay tax on, because of all that IP we had to buy from shell-company-x, woe is us.

However, if shell-company-x had to pay tax at 30% too, the US would give it a refund of 0% (assuming it was based in the tax-dodge country of Bermuda or similar) and still have to pay 30%. The trouble then is that the US cannot claim taxation from a foreign company. At that point, they can introduce tax on imports (ie that IP the shell-company-x happens to own and sell to Apple, Google or whoever). Net result: 30% tax for the US to these US-based companies.

I guess there will be other loopholes to exploit though and this will turn into a massive tail-chasing exercise that will have knock-on effects for "tax legitimate" companies.

Hollywood accounting (4, Insightful)

sjbe (173966) | about 5 months ago | (#47212407)

Trouble is, they just set up shell companies that are subsidiaries and say we made no money to pay tax on, because of all that IP we had to buy from shell-company-x, woe is us.

The solution is basically a gross receipts tax, which does have its drawbacks but is a lot harder to dodge. I'm an accountant and take it from me that it is a LOT harder to fudge the top line than the bottom line. If you just tax profits then it is fairly trivial to shuffle money around such that you show "no profit". It's called Hollywood accounting [wikipedia.org] . All these schemes that Apple and others are engaging in are variations on Hollywood accounting.

Re:nations need to reform their tax policies (0)

Anonymous Coward | about 5 months ago | (#47212371)

Do you have any idea what you are talking about? Obviously not.

Please lookup "double tax agreement" in a dictionary.

Europe always wants to STEAL American Companies' $ (-1)

Anonymous Coward | about 5 months ago | (#47211753)

WHy don't they just do their onw Apple, hm? Instead of STEALING Apple's well-earned money, Europe wants its money for FREE!

Re:Europe always wants to STEAL American Companies (1)

alen (225700) | about 5 months ago | (#47211839)

yeah, how else are they going to pay for their socialism

Re:Europe always wants to STEAL American Companies (0)

Anonymous Coward | about 5 months ago | (#47211957)

May I humbly suggest that you go back to sticking your head in the Sand. If you think that the EU and Europe in General is socialist then comrade, you are in Cloud Cuckoo Land a.k.a. The USA.
Sure we have things that you might consider 'socialist' and therefore evil (Commie Bastards) but our is IMHO a more mature society than the one in the US. We don't put up notices along the roadside like 'Trespassers will be Shot, Survors will be shot again' etc. (As seen in Colorado a few days ago).
We don't consider paying via our taxes for universal healthcare, free at the point of delivery. IMHO, this is a fundamental right.
A more liberal society indeed but certainly not Socialist and most certainly not Communist. Have you ever lived in a truly Socialist or Communist country? Probably not so go and stick your head back in the Sands, possibly somewhere near White Sands in the hope that you get your ass blown off by a rocket.

Re:Europe always wants to STEAL American Companies (0)

Anonymous Coward | about 5 months ago | (#47212173)

No, Europe doesn't want to steal American Companies' $.
We want €.

Re:Europe always wants to STEAL American Companies (2)

gnupun (752725) | about 5 months ago | (#47212875)

It's not stealing, Europe should receive taxes for Apple goods sold in Europe. It's just that tax laws have not been updated to handle globalization.

It works for Delaware, too. (1)

rmdingler (1955220) | about 5 months ago | (#47211853)

Countries that adopt the business climates most favorable to large corporations often attract them to the detriment of other nation-states.

The governments of countries shorted by the Irish model covet the money, too.

It's difficult to sustain a socialist state from within, and not that the mega-corporations are without sin, but they've become the shakedown target of choice for systems starved for cash flow.

Re:It works for Delaware, too. (1)

rtb61 (674572) | about 5 months ago | (#47212039)

It is arbitrary where the company is based as long as tax is based at point of revenue. With regard to justification of costs, either they are taxed upon full revenue or they accurately substantiated costs whether local or foreign and exclude profit margins from those costs, failure to fully substantiate costs result in full taxes on revenue. All profit shifting to tax havens or tax discounting countries must stop, those countries that specifically set out to steal the social services of other countries should suffer full economic retribution in the form of trade blockade, blocking of all currency transactions and full tax upon revenue for those companies based in those locations.

Re:It works for Delaware, too. (0)

ganjadude (952775) | about 5 months ago | (#47212117)

Countries that adopt the business climates most favorable to large corporations often attract them to the detriment of other nation-states.

instead of yelling at ireland for their practice they should perhaps try to emulate them. I mean instead of raising the rates or trying to punish those who are sucessful, how about we learn from them and do the same??

Re:It works for Delaware, too. (0)

Anonymous Coward | about 5 months ago | (#47212743)

I hear america will be using child labour in factories to emulate the succesful chinese system.

Re:It works for Delaware, too. (1)

ColdWetDog (752185) | about 5 months ago | (#47214239)

Mayhaps, but we have the strength of character to use proper capitalization.

USA! USA!

Re:It works for Delaware, too. (4, Insightful)

damienl451 (841528) | about 5 months ago | (#47213357)

They cannot just emulate them. Ireland derives their advantage from their having low taxes relative to other countries, not from having low taxes in absolute terms. What you suggest is a global race to the bottom, which may be the default "solution" in the absence of effective mechanisms for collective action. Each country has an incentive to attract more business by lowering tax rates, but, if all of them lower rates, most of them will probably end up with lower total revenues than if they could just strike an agreement not to engage in tax competition. This is what the European Union is trying to do.

Whether it is good or bad depends on what you think the effects will be and on how important a weight you place on the welfare of large multinational companies (or rather, some combination of their employees, customers and shareholders, since the tax burden falls on people) versus the public purse and the welfare of their smaller competitors.

This is one of the main reasons why countries are up in arms against these companies. Until recently, Starbucks was not paying corporate tax in the UK. Now, perhaps they were truly unprofitable, although it's hard to believe that such an iconic company would spend more than 14 years constantly opening stores without ever turning a profit AND would also tell investors that its UK operations were profitable when they were not. And there must be something deeply wrong with the UK market since many large, generally profitable companies (Apple, Google, Facebook) often fail to turn a profit there.

The real reason of course is that they use outdated tax laws that were never meant to apply to the kind of international transactions that are possible today to artificially record profits where they will be taxed the least. This is perfectly legal but contrary to the spirit of the tax agreements that were originally meant to prevent rather than encourage tax avoidance. The arms' length principle worked well when a UK company used to buy tomatoes from its Spanish subsidiary to make soup (there are publicly-available market prices for tomatoes), but not so much today when it comes to valuing the right to use the Starbucks logo, name, products and processes. If you manage to pay artificially-inflated fees to a shell corporation in a tax-haven or another EU country that you have made a deal with, you can make it look as if you did not make any profit in a country regardless of its actual profitability.

This makes no sense at all: how much you pay in tax is not a function of real economic factors but of how transactions between units within the company were structured on paper. And it is greatly unfair to smaller competitors who will have to pay taxes. Why should a small coffee shop pay at least 20% on its profits while Starbucks gets to pay a much lower rate even if it sells the same amount of coffee for the same price and has the same cost structure apart from the gimmick of using its own intellectual property?

How is it? (0)

Anonymous Coward | about 5 months ago | (#47211919)

How is it that with basically direct access to everybody's wallet, the governments are constantly needing to ask for more and more, and give less and less?
Might it have to do with the fact that more money is owed in the world then there is money available? (Way to pass the buck on to your kids assholes.)

Also doesn't "fair tax competition" require that if some nations can survive without taxes then tax havens are essentially a good downward pressure on abusive tax collecting nations?

--
Posting AC because I no longer trust moderators not to destroy my karma because I express my opinions.

I'll explain this (1, Informative)

EuclideanSilence (1968630) | about 5 months ago | (#47212013)

Since some people feel let their moral affections and prejudice against rich individuals (sometimes deserved, sometimes not) cloud their judgement , I'm going to explain what's going to happen and why.

(1) EU Government makes a big deal about "cracking down" on rich individuals because it makes the general public happy and the general public doesn't bother to double check anything anyway

(2) Big ceremony with lots of speeches

(3) Meeting between large companies representatives and lawmaker's staff. They have one topic of discussion: "How can we lower your tax burden while making it look like we are raising it?" There are two main reasons for this (a) They don't want to lose campaign funding from the companies (b) They don't want the companies moving even more of their operations overseas (your personal morality be damned, no one who matters cares at all) and leaving unemployment and a net lower tax revenue (c) Rich people spend a larger proportion of their income on economic progress like starting new companies, you spend your money on beer and video games

(4) They will come up with a brilliant idea like larger taxes on repatriating corporate money (larger companies simply won't repatriate directly, but send the money to bank accounts first in the form of income) or a tax on company growth that sounds like it only affects large companies but only serves to destroy new competitors, or something brilliant like raising corporate income on income reported locally (except they already did that but got caught so they'll find a new trick).

In the end, if the game plays out correctly, low income individuals will still payer higher taxes, large companies will pay less taxes, but it will sound a lot like the opposite is occurring. You'll be happy and the economy will be slightly less screwed than if we listened to you and made companies actually pay 30% - 40% of their income directly to the treasury trough.

Re:I'll explain this (1)

EuclideanSilence (1968630) | about 5 months ago | (#47212031)

LOL...three main reasons...

Re:I'll explain this (3, Insightful)

Solandri (704621) | about 5 months ago | (#47212465)

In the end, if the game plays out correctly, low income individuals will still payer higher taxes, large companies will pay less taxes, but it will sound a lot like the opposite is occurring. You'll be happy and the economy will be slightly less screwed than if we listened to you and made companies actually pay 30% - 40% of their income directly to the treasury trough.

Taxing corporations doesn't really gain you anything. If you shift 100% of the tax burden to individuals, they give up x% of their money to the government. If you shift 100% of the tax burden to corporations, the people still give up x% of their money to the government, just in the form of higher prices and lower wages. Income (money) is just a representation of productivity, and the only source of productivity is people. Corporations are just organizational groupings of people. Remove the people and the corporation's productivity is zero.

There are good reasons to tax corporations - excise taxes to pay for regulation enforcement, VATs to discourage middlemen, etc., and in this particular case to prevent shifting of tax revenue out of countries where the purchase transactions were actually made. But taxing corporations doesn't magically increase government revenue or the purchasing power of individuals. Corporate taxes are still paid for entirely by you and me - we just pay them indirectly via higher prices and lower wages, instead of directly to the government.

Re:I'll explain this (1)

Anonymous Coward | about 5 months ago | (#47212719)

That's true to an extent, but the problem as I see it is that these large corporations are more able to use these tax avoidance strategies than smaller businesses and start ups. This means that they not only have economies of scale on their side but also a reduced tax burden. Smaller firms will thus be less able to compete and innovation is stifled. Eliminating corporation tax could be one way around this, but as you say, this would bring its own set of problems.

Re:I'll explain this (0)

Anonymous Coward | about 5 months ago | (#47212837)

VATs to discourage middlemen

Profitable middlemen provide a valued service. That you see value in discouraging such activity betrays for ignorance of basic economics.

Re:I'll explain this (1)

EuclideanSilence (1968630) | about 5 months ago | (#47212899)

I'm surprised to read someone who realizes that taxing a corporation is just a hidden income tax. Well said.

I disagree that there are good reasons for the Federals to tax corporations, because I recommend the Feds only being allowed to tax states directly, in proportion to their population and no other taxes, exemptions, subsidies or anything.

Re:I'll explain this (0)

Anonymous Coward | about 5 months ago | (#47212919)

If they want to have the rights of a person, they can pay the taxes too. I think their bank accounts should be taxed instead of their profits though. The money needs to be moving. If they are a good company they will keep making money. If they are not, they will die. Not enough capitalism in large corporations, way too socialist at the top.

Re:I'll explain this (1)

khallow (566160) | about 5 months ago | (#47212779)

I think rather it is choice B). They'll shake down Apple for some bribe money. They could have done 1) without singling out anyone.

Pointless PR stunt. (1, Informative)

pla (258480) | about 5 months ago | (#47212065)

This will end up as just another pointless "look, we actually do something!" PR stunt, with the inevitable outcome of a token "no admission of wrongdoing" fine that amounts to 30 seconds' worth of Apple's profits and probably doesn't even pay for the "investigation".

I don't like that multinationals have perfected the art of gaming the world's tax systems, but I highly doubt Apple (and others) actually broke any laws here. Intra-company licensing fees make it trivial to shuffle both income and expenses around the world to the most favorable jurisdictions; and tax havens like Ireland that use territorial taxation make it too easy to pick a destination for reporting profits.

We don't need an investigation, we need serious tax reform. As a complete no-brainer, we could solve 99% of the problem (and not just the tax problem, but also the "3rd world child slave labor as a manufacturing strategy" problem as well) by simply disallowing cross-border cost allocation. You sell something in the US? You only get to offset that revenue (for tax purposes) with US expenses, and no, you can't sell yourself Indonesian-made iPads and call it a US expense. You have legitimate expenses? You'd damned well better have domestic profits to offset them, then, or you get to eat them. Can't afford your slave workforce anymore? Cry me a frickin' river.

But that will never happen, because no one in power seriously wants the situation to change. You think the EU doesn't understand the benefit they get from a massive influx of capital via Ireland (even if not taxed directly, it still moves around the economy)? I have a bridge to sell you. Even US leaders have no motivation to act, because it takes a hell of a lot less effort to control a welfare-dependent population than a self-sufficient one. As they see it, the higher the unemployment rate (or better, the higher the full time minimum wage employment rate - Someone has to serve Larry Ellison his lattes and Obama his chili-dogs, after all), the better.

Re:Pointless PR stunt. (0)

Anonymous Coward | about 5 months ago | (#47212467)

Maybe, or maybe not. Most first world countries want that tax money they're avoiding. The loops can't be closed until the tin-pot countries stop being a vehicle for tax dodging. There is rising pressure to publicly investigate many large corporations from within each government. The corp comes out clean but the finger always points to the same shitty little countries. Once it's happened enough, they'll be told to comply with EU law or be removed from the Union.

Re:Pointless PR stunt. (0)

Anonymous Coward | about 5 months ago | (#47212873)

I happen to live in one of those 'shitty little countries' as you like to call them. Judging by what you say the PR has done a perfect job so far.

Re:Pointless PR stunt. (0)

Anonymous Coward | about 5 months ago | (#47213387)

You think the EU doesn't understand the benefit they get from a massive influx of capital via Ireland (even if not taxed directly, it still moves around the economy)? I have a bridge to sell you.

What massive influx of capital? This is about profits made by Apple in Europe being repatriated to the USA with little to no taxation, either in the US or Europe.

You insensi7Ive clod! (-1)

Anonymous Coward | about 5 months ago | (#47212073)

committerbase arlnd 'I have to kill

Jeez (0)

Anonymous Coward | about 5 months ago | (#47212385)

So not only do we have to put up with insane taxes, now those passing insane taxes are mad that companies are avoiding them? You can't have your cukin cake and eat it too. Freedom from stupid choices isn't possible. If you make it impossible to make a profit due to high taxes and over zealous "regulations" ( usually meaning just pay the right people off), then yeah companies won't stick around and grow your economy.

make mine a double Irish with a Dutch sandwich (3, Informative)

dominux (731134) | about 5 months ago | (#47212399)

This is a very well known scam
http://en.wikipedia.org/wiki/D... [wikipedia.org]

the UK parliament is rather upset about it, assorted companies have been asked grumpy questions about their tax avoidance, in particular Google. The problem is closing these loopholes requires a lot of international cooperation and it isn't generally in the interests of the smaller countries to play ball.

Re:make mine a double Irish with a Dutch sandwich (1)

TechyImmigrant (175943) | about 5 months ago | (#47213891)

This is a very well known scam
http://en.wikipedia.org/wiki/D... [wikipedia.org]

That was the most interesting thing I've read all day.

Re:make mine a double Irish with a Dutch sandwich (0)

Anonymous Coward | about 5 months ago | (#47215387)

The Dutch sandwich? That sounds like some weird sex act you'd find on Urban Dictionary.

Apple's profit is outside of space/time (5, Interesting)

Required Snark (1702878) | about 5 months ago | (#47212417)

http://www.macobserver.com/tmo/article/eu-set-to-probe-irelands-tax-arrangements-with-apple [macobserver.com]

Ireland's taxation laws allow multinationals to set up subsidiaries that effectively turn them into stateless entities whose revenues are subject to no jurisdiction. It's the definition of entirely legal tax avoidance, and Apple has been among the most successful companies in routing much of its international revenues and earnings through its Irish subsidiaries.

Apple has conspired with the Irish government to move it's profit outside the space/time continuum. How else can you explain "revenues are subject to no jurisdiction?" That means the money has no legal presence anywhere on the planet. Or off the planet, as far as we know.

There are lots of locations where the rule of law doesn't apply. There are places where many different legal systems claim to be in charge. There are places like Antarctica where the international community has set up treaties so that one one country has control. Apple has been able to secrete it's money so it is not in any of these places.

They have outflanked the rule of law. They are in a literal sense "lawless": without law. Yet they make extensive use of the legal system and expect to have their business protected by civil and criminal authorities. It's corporate hypocrisy at it's most blatant.

Why are they getting away with this? I have a counter suggestion: round up all current and former living board members, everyone who was a Chief Executive Anything, put them in indefinite detention and strip them of every asset they have. Why do the deserve legal protection when they have made it their business to be above the law?

Re:Apple's profit is outside of space/time (0)

Anonymous Coward | about 5 months ago | (#47212889)

and by sending them to the Antarctica we can "freeze" their "assets"!

Two investigations in a row (2)

DickBreath (207180) | about 5 months ago | (#47212451)

The EU investigates Apple. And Toyota investigates Hovercars.

Re:Two investigations in a row (0)

Anonymous Coward | about 5 months ago | (#47212621)

See which entity is more forward thinking....

Fair share of extortion (1)

mike555 (2843511) | about 5 months ago | (#47212967)

"Fair share of taxes" is nonsense. Taxes are extortion.

Re:Fair share of extortion (0)

Anonymous Coward | about 5 months ago | (#47213369)

I see the moderators are gov't shills again. There is absolutely no difference between taxes and "protection money."
Then give the same organized crime syndicate the right to print money and charge interest for lending it to people.

Easy solution...withhold patent enforcement (1)

swb (14022) | about 5 months ago | (#47214793)

That's a nice patent portfolio you've got there. You say your entire business model hinges on intellectual property, some ephemera that requires a court system to adjudicate? And maybe some Customs officers to block infringing devices from the US market?

Why, it'd be a shame if the courts and Customs didn't help. Kind of hard to be exclusive with just a bunch of paper backing you up..

Of course, you report that income and pay those taxes, that's maybe something we could help you with.

Or maybe your Irish friends can help you, you know, use that diplomatic influence they have with the Chinese and Koreans, since you seem to see them as your global HQ..

Re:Easy solution...withhold patent enforcement (0)

Anonymous Coward | about 5 months ago | (#47215351)

Once again the tax system sounds like a protection racket...

Load More Comments
Slashdot Login

Need an Account?

Forgot your password?