Apple Reportedly Shifted Billions of Dollars to Small Island of Jersey Amid Tax Crackdown [Updated]

Apple sidestepped a 2013 crackdown on its controversial Irish tax structure by moving the majority of its offshore cash holdings to the small island of Jersey, a self-governed territory with loose ties to the United Kingdom, according to leaked financial documents obtained by The New York Times and BBC.

The island of Jersey via its Chamber of Commerce

The so-called Paradise Papers, primarily sourced from offshore tax law firm Appleby, reveal that Apple's two key Irish subsidiaries were managed from Appleby's office in Jersey from 2015 until early 2016. Apple chose Jersey after exploring several potential tax havens, such as Bermuda and the Cayman Islands.

Apple said it made regulators in the United States and Ireland, and the European Commission, aware about the reorganization of its Irish subsidiaries, and added that the changes haven't reduced its tax bill.

"The changes we made did not reduce our tax payments in any country," an Apple spokesperson told The New York Times. "At Apple we follow the laws, and if the system changes we will comply. We strongly support efforts from the global community toward comprehensive international tax reform and a far simpler system."

Apple turned to Jersey after European officials began to crack down on the so-called "Double Irish" tax structure Apple had exploited.

The "Double Irish" tax loophole allows for multinational corporations to funnel revenue through an Irish subsidiary, which in turn sends that money to another Irish subsidiary that has residency in a tax haven. In a nutshell, the practice has enabled Apple to save billions of dollars in taxes around the world.

The European Commission found Apple paid between 0.005 percent and 1 percent in taxes in Ireland from 2003 through 2014, compared to the country's headline 12.5 percent corporate tax rate. Apple CEO Tim Cook said the Commission's ruling against Apple was "total political crap" and that the tax rates were a "false number."

When questioned by the United States Senate investigative subcommittee in 2013, Cook said "we pay all the taxes we owe." He added that Apple doesn't "stash money on some Caribbean island."

While that was true at the time, it's clear Apple was exploring similar options as part of its tax minimization efforts.

"This is how it usually works: You close one tax shelter, and something else opens up," said Reuven Avi-Yonah, director of the international tax program at the University of Michigan Law School. "It just goes on endlessly."

Cook has made it clear that Apple is willing to repatriate some of its offshore cash holdings into the United States, but he recently said tax reform is "sorely needed" first. U.S. President Donald Trump has proposed lowering the headline corporate tax rate to 20 percent, down from 35 percent currently.

Update: Apple this afternoon shared a press release entitled "The facts about Apple's tax payments," which has been written in response to today's reports. Apple says there are several inaccuracies being circulated and it is aiming to correct them.

"The debate over Apple's taxes is not about how much we owe but where we owe it. As the largest taxpayer in the world we've paid over $35 billion in corporate income taxes over the past three years, plus billions of dollars more in property tax, payroll tax, sales tax and VAT. We believe every company has a responsibility to pay the taxes they owe and we're proud of the economic contributions we make to the countries and communities where we do business.

Under the current international tax system, profits are taxed based on where the value is created. The taxes Apple pays to countries around the world are based on that principle. The vast majority of the value in our products is indisputably created in the United States -- where we do our design, development, engineering work and much more -- so the majority of our taxes are owed to the US.

When Ireland changed its tax laws in 2015, we complied by changing the residency of our Irish subsidiaries and we informed Ireland, the European Commission and the United States. The changes we made did not reduce our tax payments in any country. In fact, our payments to Ireland increased significantly and over the last three years we've paid $1.5 billion in tax there -- 7 percent of all corporate income taxes paid in that country. Our changes also ensured that our tax obligation to the United States was not reduced.

We understand that some would like to change the tax system so multinationals' taxes are spread differently across the countries where they operate, and we know that reasonable people can have different views about how this should work in the future. At Apple we follow the laws, and if the system changes we will comply. We strongly support efforts from the global community toward comprehensive international tax reform and a far simpler system, and we will continue to advocate for that."

The release also provides details Apple has reiterated multiple times in the past, such as its position as the largest taxpayer in the world and the fact that it holds overseas cash because that's where the majority of its products are sold. Apple also again says that comprehensive international tax reform "is essential" and that it continues to advocate for a simplification of the tax code.

Note: Due to the political nature of the discussion regarding this topic, the discussion thread is located in our Politics, Religion, Social Issues forum. All forum members and site visitors are welcome to read and follow the thread, but posting is limited to forum members with at least 100 posts.

Top Rated Comments

(View all)
Avatar
36 months ago
I blame them. If companies paid fair taxes then western democracies wouldn’t be on their knees with debt. Just think of it this way; every $1 Apple or Google or Amazon hoards in these accounts is $1 more that you and your fellow taxpayers have to find every year...
Score: 65 Votes (Like | Disagree)
Avatar
36 months ago
Can you blame them? I'd do the same.
Score: 50 Votes (Like | Disagree)
Avatar
36 months ago
Apple is using the law, if lawmakers are not smart enough to create comprehensive tax laws, it's their fault not Apple's, however ...

Apple loves to paint itself as a "champion of goodness", a moral, caring, sensitive company ... in reality, they are as greedy and crafty as any other company, but they have the world convinced otherwise. Case in point, ask a young person who is the more evil/greedy company, Apple or Exxon, Apple or IBM, or Apple or Boeing. I bet every time the person would say Apple is not a greedy company, they have all those young, cool, hip, long hair, tattooed employees at their stores who wear cool Apple t-shirts and say dude a lot.

It's all crap, Apple price gouges its customers for a much as they can get away with and then they spend millions on tax lawyers and accountants to exploit every loophole they can find. All this while their public relations department convinces the world of their so-called altruism.
Score: 50 Votes (Like | Disagree)
Avatar
36 months ago
Surprise surprise. Apple dodging paying its fair share in taxes as usual. This company really needs to be put to the fire for stunts like this.
Score: 34 Votes (Like | Disagree)
Avatar
36 months ago
It smells and doesn’t fit a company who’s ceo teaches the world about fair trading, climate neutral producing and gender neutral opinions.

That said... when money is in the picture I see more strange things happening.
Score: 29 Votes (Like | Disagree)
Avatar
36 months ago

Politicians are so stupid. Stop demonizing and penalizing companies for the sin of engaging in a productive, and even worse, profitable action, and then expecting to keep the fruits of these productive efforts.

On one hand, people say they have a fiduciary responsibility to their shareholders to maximize value, and on the other, they say that Apple owes the people something, because Apple produced and sold a value, and the people didn't.

And they hold both views with perfect comfort. Ridiculous.

Apple would not exist were it not for the opportunity and skill they found in the United States. I pay one third of my salary in taxes so there is absolutely no reason Apple can't pay even 15%.
Score: 27 Votes (Like | Disagree)

Top Stories

iPhone Maker Foxconn Says China's 'Days as the World's Factory Are Done'

Wednesday August 12, 2020 7:55 am PDT by
China will no longer be the world's manufacturing epicenter going forward, according to Apple's largest supply chain partner Foxconn, which has been gradually expanding its operations in other countries amid the U.S.-China trade war. "No matter if it's India, Southeast Asia or the Americas, there will be a manufacturing ecosystem in each," said Foxconn chairman Young Liu, according to Bloombe...

Leaker Jon Prosser: Apple Watch and iPad Launching in September, iPhone 12 Event to Take Place in October

Wednesday August 12, 2020 4:31 pm PDT by
Apple last month confirmed that this year's iPhone 12 models will launch outside of their normal September timeframe and will be "available a few weeks later," which has led to speculation about when an event might be held. Leaker Jon Prosser, who sometimes shares accurate knowledge of Apple's plans, today said that Apple will hold its iPhone 12 event during the week of October 12, with...

Apple Takes Legal Action Against Small Company With Pear Logo

Saturday August 8, 2020 11:09 am PDT by
Apple is taking legal action against the developers of the app "Prepear" due to its logo, according to iPhone in Canada. Prepear is an app that helps users discover recipes, plan meals, make lists, and arrange grocery deliveries. The app is a spinoff of "Super Healthy Kids," and the founders claim that they are facing litigation from Apple. Apple reportedly takes issue with Prepear's logo, ...

Apple to Launch Bundled Subscription Services Called 'Apple One'

Thursday August 13, 2020 3:41 am PDT by
Apple will launch a new range of subscription service bundles called "Apple One" as soon as October, according to a new report by Bloomberg's Mark Gurman. The series of bundles would allow customers to subscribe to several Apple digital services together. This is expected to result in a lower monthly price than when the services are subscribed to individually. Bloomberg reports that the...

Apple Releases iOS and iPadOS 13.6.1 With Fix for Storage Issue and Green Tinted Displays

Wednesday August 12, 2020 1:31 pm PDT by
Apple today released iOS and iPadOS 13.6.1, minor updates that come a month after the release of the iOS 13.6 update with Car Keys and Audio Apple News+ stories. The iOS and ‌iPadOS‌ 13.6.1 updates are available on all eligible devices over-the-air in the Settings app. To access the updates, go to Settings > General > Software Update. iOS 13.6.1 addresses an issue that could cause...

Apple May Release 4G-Only iPhone 12 in Early 2021

Tuesday August 11, 2020 5:28 am PDT by
In a research note shared by Business Insider, Wedbush Securities analysts said that Apple may release a cheaper iPhone 12 in early 2021 with no 5G connectivity. Wedbush initially believed Apple would launch a mix of 4G and 5G iPhone 12 models this fall. Following re-examination of Asian supply chains, analysts Daniel Ives, Strecker Backe, and Ahmad Khalil revised the predictions,...

Apple Removes Fortnite From App Store [Update: Epic Files Lawsuit Against Apple]

Thursday August 13, 2020 11:58 am PDT by
Just hours after Epic Games introduced a new direct payment option for Fortnite that skirts Apple's in-app purchase rules, Apple has pulled the Fortnite app from the App Store. Fortnite is no longer available for download on the iPhone or the iPad, and Apple provided a statement to MacRumors on Fortnite's removal:Today, Epic Games took the unfortunate step of violating the App Store...

iPad Pro Keyboard Comparison: Logitech's $160 Folio Touch vs. Apple's $300 Magic Keyboard

Tuesday August 11, 2020 2:11 pm PDT by
Logitech recently debuted the Folio Touch, a keyboard and trackpad case designed for the 11-inch iPad Pro that serves as an alternative to the Magic Keyboard. In our latest YouTube video, we compare the $160 Folio Touch to Apple's $300 Magic Keyboard to see which is better. Subscribe to the MacRumors YouTube channel for more videos. Logitech is selling the Folio Touch for $160, while Apple's...

Apple Releases macOS Catalina 10.15.6 Supplemental Update With Virtualization Bug Fix

Wednesday August 12, 2020 1:20 pm PDT by
Apple today released a supplemental update for macOS Catalina 10.15.6, with the update coming a month after the original launch of macOS Catalina 10.15.6. The ‌‌macOS Catalina‌‌ 10.15.6 Supplemental Update can be downloaded from the Mac App Store using the Update feature in the System Preferences app. According to Apple's release notes, the update fixes a problem that could cause...

Kuo: Global iPhone Shipments Could Decline Up to 30% If Apple Forced to Remove WeChat From App Store [Updated x2]

Sunday August 9, 2020 10:17 pm PDT by
In a worst-case scenario, Apple's annual global iPhone shipments could decline by 25–30% if it is forced to remove WeChat from its App Stores around the world, according to a new research note from analyst Ming-Chi Kuo viewed by MacRumors. The removal could occur due to a recent executive order aiming to ban U.S. transactions with WeChat and its parent company Tencent. Kuo lays out...