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You are here: MacNN Forums > News > Mac News > Apple paid just £12.9 million in corporation tax in UK last year

Apple paid just £12.9 million in corporation tax in UK last year
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Jun 27, 2016, 12:14 PM
 
Apple has paid just £12.9 million ($17 million) in corporation tax in the United Kingdom last year, it has been discovered, an increase from £11.8 million in the previous year. The relatively low corporation tax payment revelation comes as the investigation into the company's tax minimization activities across the European union nears completion, with the UK corporation tax level also seeming to be fairly low in comparison to how much profit it generated in the country alone.

According to the MailOnline, Apple's reported profits on its global operations for the last three months of 2015 equate to approximately £5.8 million ($76.5 million) per hour, which means it would have paid off the UK tax bill within just over two hours. In the last quarter of 2016, Apple reportedly earned profits of $18.4 billion on $75.9 billion of revenue, with both figures representing a year-on-year increase from $18 billion and $74.6 billion respectively.

Out of this high income, it is estimated by report sources that the UK would have contributed around £2 billion ($2.64 billion) to Apple's full-year profits. Based on the UK's corporation tax rate of 20 percent, this would cause corporation tax for the year to be in the region of £400 million ($529 million), if Apple didn't have any "ring-fenced" profits destined to be used elsewhere.

The ongoing investigation by the European Commission into the tax affairs of major multinational companies, including Apple and other tech giants, is examining whether the various tax systems across the continent are being abused. The main issue under scrutiny with regards to Apple is its deal with Ireland, reducing the corporation tax rate down from 12.5 percent to just 2.5 percent, allowing it to pay far less tax on funds funneled through the country, and making Ireland more attractive for Apple to expand its operations within in the future.

It is thought the decision from the EC will arrive next month, with Irish finance minister Michael Noonan pledging to "vigorously defend" any decision made against Apple. The company itself has already declared it has "paid every cent of tax that is due in Ireland."
     
Inkling
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Jun 27, 2016, 01:56 PM
 
Quote: "which means it would have paid off the UK tax bill within just over two hours."

That works out to Apple having earned enough to pay off all its UK taxes by 2 a.m. on January 1. Compare that to the average American, who must work until April 24th (114 days or over 1,000 times longer) to cover all his or her taxes. And yes, I know that's world income to pay off the taxes in but one major country, but it is still a shocking statistic. Someone should work out how long Apple has to "work" to pay off all its taxes around the world, as well as a similar comparison of U.S. taxes with U.S. income. Would the IRS permit us to pay off Irish politicians to creat an Irish loophole that reduced our income taxes to a mere 2.5%. I think not. Apple's Corporate Greed Index must be among the world's highest. Pitiful. It illustrates the well-established principle that the richer they get, the greedier they get. http://taxfoundation.org/article/tax-freedom-day-2016-april-24
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Charles Martin
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Jun 27, 2016, 05:40 PM
 
You miss the point here: Apple is not doing anything illegal -- Ireland ripped off its own citizens (just as the US and other countries do) by creating **legal** tax loopholes for corporations and the super-rich. The companies are *obligtated* by fiduciary regulations to maximize profit for shareholders, and that includes finding and using any tax advantage they can.

Apple pays what the law requires. In the US, that's an average of about 25 percent of net revenues. In the UK, it's about 2.5 percent. If the UK doesn't like it, they should amend their laws and block such loopholes.

This is not really about Apple (since most other multinationals do precisely the same thing in a variety of methods; see Google, see Amazon, et cetera) -- this is about bad law and bad politicians who write these laws. You'll notice they never point the fingers at themselves, do they?
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DiabloConQueso
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Jun 27, 2016, 06:45 PM
 
The day Inkling decides to pay the IRS double what he actually owes the IRS is the day I'll get on his side about corporate tax behaviors.
     
tankman
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Jun 27, 2016, 07:07 PM
 
Charles Martin wrote, "this is about bad law and bad politicians who write these laws". Why are these bad laws?
1.Ireland negotiated a deal with Apple for a 2.5% tax rate. 2.5% of something is far better than 12.5% or 25% of nothing.

The same could hold true for the US. If Democrats weren't so beholden to the anti-business crowd, they could join the GOP in allowing corporations to bring offshore profits back to the US at a minimal tax rate. Apple holds $180B offshore that it won't bring back because it would be taxed at the corporate rate of 35%. The total amount held by US corporation is about $1.5T. How much better would our economy be if they were allowed to return this money to the US?

2. Corporations don't pay taxes. Their customers pay the taxes. Raising taxes on corporations only results in us consumers having to pay more for their products.
     
chimaera
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Jun 27, 2016, 07:22 PM
 
The last time congress allowed a tax holiday for bringing back overseas profits, they expected an economic boost. None happened - the money just went into shareholder bank accounts. A tax-free gift to the 1% (mostly). This is why congress has declined to do another offshore tax holiday ever since.
     
DiabloConQueso
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Jun 27, 2016, 08:24 PM
 
"How much better would our economy be if they were allowed to return this money to the US?"

I don't know, exactly how much better would it be? How, exactly, are you going to quantify that?

I don't think you know, either.
     
Charles Martin
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Jun 28, 2016, 01:20 AM
 
Yep. It has been tried before. Apple actually joined lobbying efforts for a tax holiday, but later changed their view to what President Obama has proposed: a permanent lowering of the rate to 25 percent -- exactly what Apple pays in US taxes on their US profits right now.

So why hasn't that passed? Because there's a catch on that 25 percent: it requires that the reimported money be spent on creating jobs or other business expansion expenses: no executive bonuses, no distribution of it to shareholders.

Guess who opposes that. Have a guess.
Charles Martin
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