Avoid taxes like Apple

Avoid taxes like Apple
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Apple has charmed the US Congress with its ingenious tax evasion scheme

It is widely believed that tax evasion in the United States is the most serious crime and the punishment for it is inevitable and harsh.

If this were the case, then the Directors and owners of all major American corporations should have been in prison long time ago. You ask why in utter disbelief? Simply, because they do not pay taxes. How is this possible in the most exclusive country? Easy.

May 21, 2013 Senate hearings on Apple’s $ 40 billion tax evasion.

A US Senate Subcommittee reviewed the structure and methods used by multinational corporations to transfer profits offshore, as well as how such activities comply with U.S. tax regulations. Among the witnesses were representatives of the Treasury Department, the tax service, representatives of Apple Inc. and tax experts.

Apple's ingenious scheme. How not to pay any taxes at all without breaking the laws

Genius lies in simplicity. Apple Corporation registered an offshore holding company, Apple Operations International (AOI), in Cork, Ireland in 1980. The company has 3 employees, 2 Directors and an accountant. One of them is Irish, two are American.

Apple Operations International (AOI) consolidated revenue from all of the Corporation's international operations and did not pay taxes in any country.

Apple explained that although AOI has been registered in Ireland since 1980, it has not declared tax residency in Ireland or any other country and therefore has not paid any corporate income tax to any national government for the past 5 years.

You will be surprised and exclaim that this cannot true! Yes, it can. Apple's lawyers and financiers have dug up some differences in the US and Irish tax laws. Tax residency is treated differently in these countries. In the United States, tax residency is determined by the place of incorporation of the company, and in Ireland, the company management and control tests are used. If the company is managed from California, then it is not resident in Ireland. At the same time, if the company is not registered in the United States, it is not a tax resident of the United States.

Second part of the scheme

The other important piece is Apple Sales International (ASI), which is the second Irish partner. This is the repository for all of Apple's offshore intellectual property rights.

ASI buys Apple's finished products from contract manufacturers in China - and resells them at a high mark-up to other Apple affiliates in Europe, Middle East, Africa, India, and the Pacific. In fact, it collects license fees for using the rights to Apple products. ASI also had no employees, despite revenue of $ 38 billion over three years. ASI paid taxes, but you will be surprised how much.

Excerpt from the report of the US Senate Subcommittee on taxes ASI

The IP smart payments channeled the withdrawal of $ 74 billion from the United States alone for the period from 2009 to 2012.

From September 30, 2011 to September 29, 2012, the fiscal year in the US, of the $36.8 billion profit received abroad, Apple contributed $713 million in taxes to the US budget. Thus, the effective tax rate was just over 1.9% compared to 2.5% a year earlier. For comparison, the "normal" income tax rate in the US is 35%.

According to Apple CEO Tim Cook, 61% of the company's total revenue was generated from international operations.

The company's tax optimization strategy is known as “Double Irish with a Dutch Sandwich”. This scheme allows withdrawing of profits to Ireland, the Netherlands and the Caribbean Islands. This was not enough for Apple. It also actively uses internal tax offshores in the US: its headquarters are located in California, but most taxes are paid by Apple in the neighboring state of Nevada, where the tax rate is zero for a number of transactions.

Impudence wins! All participants of the hearing were moved by the arrogance of Apple's management.

Apple currently holds about $ 252 billion in profits offshore, where it can avoid paying US taxes. This is more than 90% of the company's total cash.

Why is Tim Cook still not in jail?

It's very simple. There is no corruption in the United States. In the US, the corruption was called lobbying and turned into a banal business. Seventy-eight congressmen have legal lobbyists in their own families.

What the Silicon Valley giants are doing is not a secret. Everyone knows that after his arrival in the White House, President Trump passed a law through Congress to reduce the corporate tax from 35% to 21%. But the devil is always in details.

In the third quarter of 2017, Apple spent $ 2.3 million on lobbying alone. The other four major technological companies - Microsoft, Facebook, Alphabet (which owns Google) and Amazon - donated another $ 14 million.

These efforts of the titans of Silicon Valley are richly rewarded. Now their offshore profits will be taxed at a flat repatriation rate of 15.5%. If they transfer money to the US, Apple can save $ 40 billion.

That is how the bill was bought for $ 2.3 million and saved the company $ 40 billion.

Say whatever you want but there is no corruption in the US.

Al Capone is jealous of Tim Cook. He was born at the wrong time.

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