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ORIGINAL FRENCH ARTICLE: Apple invente les filiales sans domicile fiscal

by Céline Agostini

Apple invents subsidiaries without fiscal domicile

Translated Thursday 23 May 2013, by Elaine Scott

Tim Cook, director of Apple since 2011, has been summoned by the American Senate to explain the firm’s fiscal movements. According to the conclusions of a parliamentary commission of inquiry, Apple could have avoided paying tax on tens of billions of dollars of profits in America by inventing a new trick: the creation of subsidiaries without fiscal domicile.

The report of the commission of inquiry is clear. Over 40 pages, it identifies the loopholes exploited by Apple in order to pay the least amount of tax possible to the American tax authorities. Apple’s skill in avoiding paying American taxes is not new information. On the other hand, the Senate highlights three Apple subsidiaries which do not have fiscal domicile in either America, nor in Ireland, the headquarters of the technology giant’s foreign activities.

5 years without tax return

Particularly targeted by the commission is Apple Operations International which manages Apple stores throughout Europe. According to the commission of inquiry, Apple Operations International, does not seem to have “employees, nor a physical presence” and could have “by exploiting loopholes” of the American and Irish fiscal systems, “avoided making a tax return for 5 years, over which its income totals 30 billion dollars”. An astronomical amount, added to other evasions which allow the company to keep billions of dollars for itself.

At the American Senate, anger is growing. Democrat Senator Carl Levin, who presides over the commission of inquiry, confirms that “Apple is not content with moving its profits to a foreign tax haven”. “It has looked for the Holy Grail of tax evasion. It has created entities abroad possessing tens of billions of dollars but which do not have any fiscal residency”, the Senator explained.

Several large companies in Silicone Valley have been scrutinised

Apple is not the first large company in Silicone Valley to be scrutinized by the commission of inquiry. In September, the fiscal practices of Microsoft and of HP had been closely studied. In each case, the commission did not accuse the companies of breaking the law. However, it underlined that these particularly aggressive practices were extremely costly for the American Treasury.

In a press release, Apple responded by confirming that the company will pay more than 7 billion dollars of tax to the USA for the past financial year which ended on March 31, 2013. A drop of water in an ocean of dollars.

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