Apple Responds to Tax Accusations From ICIJ’s ‘Paradise Papers’

Apple campus

Apple has responded to allegedly receiving illegal tax breaks first revealed by the International Consortium of Investigative Journalists (ICIJ) in the “Paradise Papers.” Apple was previously fined $14.5 billion for being granted substantial tax breaks in Ireland. The report claimed that Apple’s “secret stash” relocated to a small village near the coast of Normandy called Jersey. This tiny pocket of a town doesn’t tax business entities. The tech legend is reportedly storing over $250 billion in this bonafide tax haven. Apple released a public response to the accusations yesterday.

Apple said that after Ireland’s tax reforms in 2015, they immediately adhered to its terms by switching residencies of their Irish subsidiaries. They changed their corporate structure that year as well to maintain U.S. tax payments but this had no reduction in their taxes. In fact, they said that their tax payments to Ireland continued to increase forking out over $1.5 billion the last 3 years. Apple’s contributions have generated 7% of the country’s corporate income tax solidifying its value to the global economy.

Moreover, they reminded critics that Apple is the world’s largest taxpayer with over $35 billion paid over the last 3 years. They also have a slightly higher global tax rate of 24.6% and fulfills its tax obligations in all countries where Apple products are sold. Explaining the tax process of products sold in foreign regions, Apple mentioned that, “additional tax is…due in the US when the earnings are repatriated.” The company made clear that their tech was not escaping the tax and reports made by the ICIJ were inaccurate.

Apple also pointed out that most of “the value in Apple products is created in the United States, where design, development, engineering work and more are accomplished.” Therefore, they claim that if any taxes are owed, it should be given to the U.S. Past attempts from the EU to interfere with taxes owed to the U.S. only complicated the matter.

They also normalized the concept of storing offshore capital saying, “that’s where it sells the majority of its products.” However, post-tax earnings from foreign purchases are required to pay US taxes and has set aside $36 billion to cover the outstanding balances. This number does not include the $35 billion issued over a 3-year time span mentioned earlier in the article.

Apple noted the historical and economic significance of this region and how it currently provides 12,000 jobs in Ireland and 1.5 million across the EU. They emphasized that their move to Jersey was to comply with US tax responsibilities and in no way provided any sort of financial benefit.

Lastly, they advocated for international tax reforms where “free flow of capital will accelerate economic growth and support job creation. A coordinated legislative effort…will remove the current tug of war between countries over tax payments and ensure certainty of law for taxpayers.”

Despite Apple’s words against the ICIJ, we’re talking about the same people who brought us the “Panama Papers.” This is a seasoned group of 165 investigative journalists in over 70 countries all dedicated to weeding out global corruption and exposing those responsible. It was originally founded by the Center for Public Integrity and has always aimed to honor similar codes of rectitude. The ICIJ is considered to be “least-biased” with very high chances of reporting factual data.

It’s too soon to say which party’s version is more accurate but we doubt this discussion will end here. Still, it makes you wonder which interpretation will prevail? Apple or the ICIJ? Do you think this report will usher in congressional hearings similar to those held by Google, Facebook and Twitter? 

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