Apples CEO Tim Cook made no apology on Tuesday for the giant innovator saving billions of taxes using a “flaws” in both US and Irish tax law. Cook stated that his company is backing up the corporate tax law reform even though Apple could end up paying more taxes.
The CEO was called to testify because of the Senate Permanent Subcommittee on Investigations found that Apple has avoided paying $9 billion in taxes for the last year using Irish subsidiaries who have no residence for tax purposes. The case is a part of a broader problem of companies using tax law imperfections to claim more of their income deriving from abroad. Many companies are tending to outsource operations in order to escape from high US taxes.
Senator Carl Levin, chairman of the subcommittee said Apple have found a “Holy Grail of tax avoidance” creating Irish unit that payed no income taxes to any authority for the last 5 years. He accused Apple of creating a web of holding companies in Ireland which negotiated with Irish government for a 2% tax on income.
There are vast amount of options where tax law should be changed in a way to bring those income tax funds in US. Some suggest a tax of overseas earnings of around 15%. Apples CEO Tim Cook endorsed a corporate tax revision that would make the tax law more flexible than the existing 35% and impose a reasonable tax rate on foreign earnings.
The points Apple made about the subsidiaries in Ireland were convincing enough. Apple has been in the country since 1980, especially Cork operations where 4000 people are working. Furthermore, Apples cost sharing agreement is regularly audited by IRS and complies with US Treasury regulations
At the end of the day what Apple did, is making the best of a situation using the flaws of the tax law to increase revenue and they didnt get the blame.
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