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The BBC & Guardian have just posted massive Reports about Apple's Tax Games as Revealed in the 'Paradise Papers'



What are the Paradise Papers? The Paradise Papers is a set of 13.4 million confidential electronic documents relating to offshore investment, leaked to the public on 5 November 2017 mostly from the offshore law firm Appleby, along with corporate registries in 19 tax jurisdictions, which reveal the financial dealings of politicians, celebrities, corporate giants like Apple and business leaders. There are two larger reports out today on the subject of the Paradise Papers in context with Apple.


The BBC reports that "The 13.4 million records were passed to German newspaper Sueddeutsche Zeitung and then shared with the International Consortium of Investigative Journalists (ICIJ). Panorama has led research for the BBC as part of a global investigation involving nearly 100 other media organizations, including the Guardian, in 67 countries. The BBC does not know the identity of the source.


The world's most profitable firm has a secretive new structure that would enable it to continue avoiding billions in taxes, the Paradise Papers show.


They reveal how Apple sidestepped a 2013 crackdown on its controversial Irish tax practices by actively shopping around for a tax haven.


It then moved the firm holding most of its untaxed offshore cash, now $252bn, to the Channel Island of Jersey.


Apple said the new structure had not lowered its taxes.


It said it remained the world's largest taxpayer, paying about $35bn (£26bn) in corporation tax over the past three years, that it had followed the law and its changes "did not reduce our tax payments in any country".


In order to keep its tax rates low, Apple needed to find an offshore financial centre that would serve as the tax residency for its Irish subsidiaries.


In March 2014, Apple's legal advisers sent a questionnaire to Appleby, a leading offshore finance law firm and source of much of the Paradise Papers leak.


It asked what benefits different offshore jurisdictions - the British Virgin Islands, Bermuda, the Cayman Islands, Mauritius, the Isle of Man, Jersey and Guernsey - could offer Apple.


The document asked key questions such as was it possible to "obtain an official assurance of tax exemption" and could it be confirmed that an Irish company might "conduct management activities… without being subject to taxation in your jurisdiction".


They also asked whether a change of government was likely, what information would be visible to the public and how easy it would be to exit the jurisdiction.



Leaked emails also make it clear that Apple wanted to keep the move secret.


One email sent between senior partners at Appleby says: "For those of you who are not aware, Apple [officials] are extremely sensitive concerning publicity. They also expect the work that is being done for them only to be discussed amongst personnel who need to know."


Apple chose Jersey, a UK Crown dependency that makes its own tax laws and which has a 0% corporate tax rate for foreign companies.


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Paradise Papers documents show Apple's two key Irish subsidiaries, Apple Operations International (AOI), believed to hold most of Apple's massive $252bn overseas cash hoard, and Apple Sales International (ASI), were managed from Appleby's office in Jersey from the start of 2015 until early 2016.


This would have enabled Apple to continue avoiding billions in tax around the world. You could read more of the BBC report titled "Paradise Papers: Apple's secret tax bolthole revealed." The BBC report has a couple of videos on the matter relating to Apple and the Paradise Papers.




The Guardian's report adds that "The Paradise Papers show two of Apple's Irish subsidiaries, AOI and ASI, in the process of changing tax residency to Jersey.


Apple refused to discuss the details. But the Guardian understands ASI is now a dormant company.


Apple refused to say where the valuable economic rights once owned by ASI had been moved to but it is understood all its Irish operations are now run through companies tax resident in Ireland.


Apple refuses to say how much money it makes through its Irish companies, making it difficult to assess the significance of the sum.


Apple's financial statements indicate that it has continued to enjoy a low tax rate on its international operations. The firm made $122bn in profits outside the US during that same three-year period, on which it was taxed $6.6bn – a rate of 5.4%.


At the end of the Guardian's report they quote Cook: "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 company has repeatedly defended its tax affairs over the years. Its chief executive, Tim Cook, told the US Senate committee that Apple paid all the taxes it owed and complied with both "the laws and the spirit of the laws."


The company has also condemned attempts by the European commission to get it to pay a record $14.5bn in unpaid taxes.


"The finding is wrongheaded," Cook told the Irish broadcaster RTÉ. "It's not true. There wasn't a special deal between Ireland and Apple. When you're accused of doing something that is so foreign to your values, it brings out outrage in you."


You could read more on the Guardian's report titled "Apple secretly moved parts of empire to Jersey after row over tax affairs."


In the last 24 hours an explosion of videos have poured onto YouTube about various entities avoiding tax exposed by the Paradise Papers. You could check it out starting here. Apple has yet to comment on the leaked documents.


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