Taxing Apple - an update
The impact of the UK’s diverted profits tax, the 25 per cent levy introduced by George Osborne, the former chancellor, in April last year, was questioned by many commentators in January when it emerged that it did not play a part in a high-profile settlement of a long-running investigation between HMRC and Google in January.
But the DPT was a factor in a decision by Facebook to change its structure. The move, announced in March, resulted in it booking sales in the UK, instead of routing the revenues through Ireland.
... Australia is following the UK in implementing tough anti-avoidance laws, including new rules put in place in January which cancel tax benefits obtained from tax avoidance schemes and increases penalties on income that companies seek to shift offshore. But the ATO [Australian Taxation Office] is becoming frustrated with schemes devised by the big four accountancy firms that, it claims, set out to exploit legal loopholes and unfairly shields multinationals from tax on sales made to Australian customers.
Corporate America rallies to Apple’s cause - FT.com: "A group of 185 American CEOs has urged the leaders of 28 EU member states to stop the European Commission from claiming €13bn in underpaid taxes from Apple, calling the attempt a “grievous self-inflicted wound”."
In her fight against what she describes as free riders in the corporate tax system, Vestager insists she wasn’t looking to punish a particular company.
Apple was not her target, legally speaking: that was the Irish government. She was looking for a case that would stop the culture of rampant tax avoidance in Europe in its tracks. The world’s biggest company was merely the collateral damage.
Indeed, Vestager’s case against Apple might never have been launched if not for a hearing that took place in the United States.
In 2011, Almunia had set up a Tax Planning Practices Taskforce and charged it with exploring the possibility of using competition law to enforce tax compliance by major companies.
So when, in May 2013, a group of U.S. senators held televised hearings in which they pushed Apple executives to explain the company’s tax practices, officials on the taskforce were quick to take note.
[...] “Most reasonable people would agree” that Ireland was a tax haven for Apple, was how John McCain, the former Republican presidential candidate, summed up the proceedings.
Tax avoidance by multinational firms is a complex challenge for national governments and the global tax system. Increasingly, high-income countries have been moving from foreign tax credit systems, to exempting foreign source income from domestic taxation. ... Domestic tax rates should ensure optimal allocation between domestic and foreign assets, while the tax base should be set to ensure asset purchases are undistorted. Countries may be forced to change their tax systems in more fundamental ways, however, as the mobility and flexibility of multinational corporations continues to grow.