The BBC reported on Monday that Apple had avoided paying billions in taxes by relocating their most important holding firms to the Channel Island of Jersey. The revelations came as a result of an investigation carried out by the media giant after gaining access to the recently leaked Paradise Papers.
In the millions of pages and documents that make up the Papers, journalists have found evidence of tax evasion and asset relocations to offshore havens by some of the world’s biggest firms, including Apple, Nike, Uber, and more.
World personalities have also been found in the controversial documents, including several members of Donald Trump’s cabinet, the Queen of England, and even artists like Bono from U2. Leakers say there are still more documents underway, and more revelations will come to light as journalists dig out the dirt.
How did Apple avoid paying billions in taxes?
In 2013, CEO Tim Cook testified before the U.S. Senate that Apple did not “depend on tax gimmicks,” and that they did not “stash money on some Caribbean island.” Only one of those statements turned out to be true, as the company evidently created a corporate scheme to pay as little tax as possible abroad.
The reason why the Cupertino executive was explaining himself to the Senate in the first place was that the company was being investigated due to their shady financial practices. Apple had been avoiding tax payments by basing their international sales and operations divisions in Ireland.
This scheme, known as a double Irish, was uncovered after several years of investigations. The Irish government caved in to pressure from the European Commission and changed their laws to avoid perpetuating its tax haven condition to foreign companies.
As a result, Apple’s legal team got in touch with Appleby, an offshore financial advisory firm dedicated to dealing with the sort of troubles the company was facing. They needed a new tax haven, and quick. Appleby delivered a now-famous questionnaire it sent out to several islands in the Caribbean and the English Channel.
Out of all the competitors, it was the Channel Island of Jersey the one who confirmed that they met all the necessary criteria to become Apple’s new stash hideout. The rest, as they say, is history.
Over the last couple of years, Apple has remained the company who pays the most taxes in the world at more than $10 billion annually in average. However, at the same time, it has managed to pay less than 5% of all foreign tax it owes thanks to their financial structure. Apple’s $252 billion in offshore cash is more than the foreign reserves of the U.S. and the U.K.
Source: BBC