The Australian Financial Review reports it has uncovered a scheme that it says has allowed Apple to move almost $9 billion in untaxed Australian profit to Ireland. The program has allowed Apple to pay a mere $200 million in taxes on $8.9 billion in profit over the past ten years or so.
Here’s how the whole thing works: Apple has created an Ireland-based company known as Apple Sales International which contributes money toward the research and development budget in Cupertino. This allows the company to legally claim an economic stake in these products and gives ASI partial ownership of the intellectual properties that comprise Apple’s products.
Then Apple routes most of the profits for international sales of said products to Apple Sales International under the guise of international property licenses. The money is paid by Apple’s Australian branch before taxes, allowing it to report much lower profits, which allows them to pay much lower taxes.
“Newspapers have had lots of stories about tax avoidance by Microsoft and Google and Apple, but there are hardly any numbers,” said University of Sydney senior lecturer of taxation law Antony Ting, who has published a review of Apple’s tax arrangements.
“Now, for the first time, there are numbers for the profits that escaped from Australian tax.”
It should be noted that none of this is actually illegal. Shifting money overseas in this manner is a common method used by firms to avoid taxation. Many large corporations use similar loopholes to minimize the amount of taxes they pay to their respective governments. However, Australian official do say they have plans to attempt to recover the taxes that firms such as Apple have avoided paying.
