Paradise Papers: Apple Defends Jersey Tax Arrangements

Apple has defended its tax arrangements following allegations made by the Intranational Consortium of Investigative Journalists’ (ICIJ) coverage of the Paradise Papers – a trove of leaked documents that claim to show the offshore dealings of wealthy individuals and organisations.

Claims made by the BBC’s Panorama programme among others allege that Apple moved some of its business to the UK crown dependency of Jersey in a bid to circumvent changes to Irish tax law in 2015.

An EU investigation found Apple had been able to avoid taxation on almost all profits generated in the EU single market thanks to a structure which routed revenues through two “paper” headquarters in Ireland and minimal tax rates in the country.

Apple tax

It effectively paid a corporation tax rate of 0.005 percent in 2014 whereas other businesses did not. The EC alleges this is state aid and has ordered the Irish government to recover as much as £11 billion in taxes.

Apple states that the moves to Jersey did not reduce its tax bill in any country and was designed to preserve the amount of tax it pays the US government.

It argues that since the majority of its products are designed and developed in the US, it is only right that the majority of its contributions are paid there. It adds that it pays VAT in the countries where its products are sold and then pays tax in Ireland, where it has 6,000 staff working on distribution and sales.

“Apple believes every company has a responsibility to pay its taxes, and as the largest taxpayer in the world, Apple pays every dollar it owes in every country around the world,” it adds. “We’re proud of the economic contributions we make to the countries and communities where we do business.”

Furthermore, it claims that it is the largest taxpayer in the world, contributing $36 billion over the past three years, and has the same amount stashed for ‘deferred’ taxes on non-US sales. Apple also says it remains Ireland’s largest corporate tax payer and has been subject to the statutory 12.5 percent rate since 2015.

It’s clear that Apple does not believe it has done anything wrong and instead is calling for simpler tax rules that enable the free flow of capital.

“We understand that some would like to change the tax system so multinationals’ taxes are spread differently across the countries where they operate, and we know that reasonable people can have different views about how this should work in the future,” it says.

“At Apple we follow the laws, and if the system changes we will comply. We strongly support efforts from the global community toward comprehensive international tax reform and a far simpler system, and we will continue to advocate for that.”

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