Paradise Papers: Dear Tim Cook – Süddeutsche Zeitung

But what unsettles me the most is the way in which Apple instructed a law firm to obtain an “official assurance of tax exemption” from the government of a country. Why do you want that? Why do you feel entitled to not pay any taxes in a country? Did you want to make zero-tax status a precondition for establishing tax residency there? What gives you the right to do so?

Yep.

Source: Paradise Papers: Dear Tim Cook

24 thoughts on “Paradise Papers: Dear Tim Cook – Süddeutsche Zeitung

  1. I struggle to see why people are upset with Apple on this one. The company appears to have broken zero laws.

    We all do what we can to make sure we pay as little tax as legally allowed. Anyone who has claimed tax credits, used deductions, or done anything other than pay the full amount without using the rules setup by their government, should think twice about criticizing Apple. Just because the company can afford to use the laws to its advantage more than the average Joe, doesn’t mean we should vilify it.

    With respect to asking for an official assurance of tax exemption, I think we’d all do the same. It’s simply a way to make sure everyone involved understands the laws and is on the same page. Without such an assurance companies and people could spend tons of time and money moving businesses only to find out there was a misunderstanding or someone changed their mind.

    It never hurts to ask for an exemption either. If the government says yes, that’s on them, not the company asking for it.

  2. It is called an Advance Tax Ruling. Almost all tax jurisdictions around the world offer this service. A company outlines what they plan to do and tax officials provide an opinion on whether it complies with existing laws and regulations.

    Do you think Apple should avoid low-or-no tax jurisdictions? What about you? Do you forgo available deductions so you can pay more?

    As I’ve written you before, multiple jurisdictions around the world offer low-or-no tax arrangements in order to attract multi-nationals that would otherwise have no operation in their country. The company wins; the country wins. If you don’t like it, your outrage should be directed at the government that offered the incentives.

    How does the country win? They gain high-skill employment for their citizens. Banking, finance, accounting, legal, and other professions. More demand for real estate, telecommunications, etc. Look at Ireland’s experience over the last 40 years for a live example close to your home.

    • I don’t think the number of jobs in the Cayman Islands, or on Jersey or Guernsey has ballooned in recent years. The Irish situation is very different; they focused on training people for mid-level jobs, initially in manufacturing, then later for customer service.

      Yes, part of the problem is the countries offering low- or zero-tax options, but also a company like Apple which claims to be moral, and go beyond the letter of the law (as Cook has said). They shouldn’t be able to do this; they should have to pay taxes on the money we earn, in part because they’re collecting money from consumers in various countries, and because not paying taxes gives them an unfair advantage (which is why they had to skedaddle from Ireland; the EU cares about that sort of thing).

  3. Anything unfair isn’t Apple’s fault. The company plays by the rules of the game.

    Paying more taxes than one is legally bound to pay is a bit foolish.

    You should give an extra 5% to the government this year because some people think it’s the right thing to do.

    This is about competition for Apple’s dollars. Countries are offering a better product (tax incentives) than the US. What if a country offers Apple 1% cheaper tax bills compared to the US or EU. Is that OK? What about 5%? What about zero taxes, but the amount of money made by Apple storing money in the country is far more than the country would have made without Apple, thus lowering the tax burden of it own citizens?

    It’s really not much different from having iPhones made in China. Using your logic, Apple should build them in the US or EU. That ship has sailed.

    • I wouldn’t compare it to manufacturing. They do pay taxes on that, and they may even pay import duties for some items, depending on the country. But the taxation thing is simply ludicrous. It’s not just Apple doing it, of course; it’s also Google, Amazon, and others. They sell stuff in EU and other countries, and pay essentially zero tax is those countries. This is something that is going to change; in fact, the UK has already started changing it for digital sales, and the EU has made a big change as well regarding digital sales.

      This said, there is some discussion about the fact that these companies lie when they say that none of the income was generated in the country where they sold goods. Google, for example, had people selling ads in the UK, but billed it to Ireland. I’m not sure where that case stands now. As for Apple, they obviously sell from and to the UK, but they claim that all their profits come from intellectual property, which is how they shift the profits to other countries.

      • it’s not about physical goods but ‘the right to use’ your computer, car etc. #ttip Intellectual Property is the business case of Philips (they love Obama’s HealthCare) and Apple, Volkswagen, Microsoft etc. will also go that way.

  4. If lying or deceit is involved, I’m all for calling them out and punishing them to the fullest extent of the law. Otherwise, people need to change the laws rather than ask a company to ignore the law because it’s successful and makes a ton of money.

    I don’t see anyone asking Joe Sixpack to pay more than he is legally bound to pay, it should be the same for everybody, including Apple.

    • Joe Sixpack doesn’t have the option to explore this type of scenario. And even if they could, it wouldn’t be worth the cost of setting up multiple shell companies, paying lawyers, etc.

      • If the option isn’t available to Joe Sixpack, that’s a government issue, not an Apple issue.

        My friend barely earns enough money to put food on the table. I earn a little more and can feed my family, and sometimes his family. I can afford a tax person, who finds me all the legal methods to reduce my tax burden. My friend can’t afford a tax person.

        Using your logic, you should be upset with me because I am doing what the law allows, even though my friend can’t afford to do the same. You should also be asking me to pay more money to the government than it’s currently asking for because it’s the moral thing to do.

        P.S. It’s all good Kirk. Nothing personal meant in any of this back & forth :~)

        • But you can get certain deductions that are – one could say – normal: mortgage interest, medical expenses, etc. These companies are creating multiple levels of shell companies to exploit loopholes. You don’t do anything like that.

          Personally, I could probably set up an Irish company and pay less corporation tax than I do now. But I wouldn’t do that; it’s immoral. This said, if Brexit leads to tariffs on services exported from the UK, then I would consider it, because I can’t take the hit of what could be very high tariffs that would be applied to the work I do.

          And I know it’s not personal.

            • I’m not judging whether it is or isn’t, but it is the rule in the US (currently). It is not the rule in the UK, where I live, or in France, where I went for a long time. I think it is a relatively uncommon deduction.

  5. Apple has to pay more taxes en when there is a shortage of capital they can lend from our friends the London city banksters. Or in the future Frankfurt/Paris/Amsterdam

  6. I awake from my night’s sleep here in the land of Aus to see a great debate has been occurring on Apples tax shenanigans.
    Reading through the blogs the debate shows there is a difference of opinions with how Apple is doing regards to paying tax.
    With what I write here I do not want to try to convert anyone to God, but state a reference to show what I believe should be occurring and stress my point in this debate. https://www.biblegateway.com/passage/?search=Matthew+22%3A15-22&version=ESV
    I refer to Matthew 22 15-22 in the Holy Bible, where the Pharisees tried to entrap Jesus. In part, “Is it lawful to pay taxes to Caesar, or not?” But Jesus, aware of their malice, said, “Why put me to the test, you hypocrites? Show me the coin for the tax.” And they brought him a denarius. And Jesus said to them, “Whose likeness and inscription is this?” They said, “Caesar’s.” Then he said to them, “Therefore render to Caesar the things that are Caesar’s, and to God the things that are God’s.”’
    It is up to an individual country to see they are getting the tax it believes should be paid. Here in the land of Aus, this is a debate that is raging at the moment. The current Conservative Federal Treasurer is pursuing Multinationals that it believes it is not paying its fair taxes to Australia. Google and Facebook are two that come to mind that have been mentioned.
    What I believe should happen is, Governments should impose an import tax on arrival of goods imported and collect the tax up front, rather than after event has occurred. So if Britain, and European countries, America, China, and Australia and the like, therefore collect what should be rendered to them up front, this problem can be alleviated. But when Governments go around promoting free trade between countries, and include deletion of import duties, then sign off them, it makes it hard to seize the tax that should be rendered to it.
    Anyone who followed this debate at the time Kirk raised the matter (30/8/2016) knows my thoughts and Kirk’s response to my writings. https://www.kirkville.com/some-thougts-on-tim-cooks-open-letter-on-taxes-in-europe/ see this link below.
    I am still a strong believer of the Magna Carta and believe anyone who believes their country is not receiving it taxes that should be rendered to it, should stand in Magna Carta portions at their countries Government, to adopt a “pay up front tax”. Happy to hear your thoughts on my writings.

  7. What all of us need to remember is that Apple does not PAY taxes. Apple COLLECTS taxes. The consumer PAYS taxes, either directly to the government, or through Apple (and other companies that pay income tax). Apple passes the taxes they pay through to the consumer in the price of devices. So by saying Apple should pay more, we are all saying we want to pay more for Apple devices. Frankly, I’m glad Apple found a low-tax location for their profits so that they don’t jack up their already-high prices any more!

    • Uh, no. Apple prices its products according to the taxes that they expect to pay on their profits – and other factors. Their profit margin, around 35% – is one of the highest in tech.

      Technically, it’s investors who pay the tax on a corporation. If taxes were zero, they would earn more dividends.

      • probably investers are not interested in dividends but in more capital/wealth. Selling shares/stocks in this DowJones bubble generates wealth (for the 1%) as a result of QE money.

  8. Kirk: you and others describe Apple as using “loopholes” as if they are abusing the rules. That is completely wrong.

    Take Jersey, for example. They introduced a “Zero/Ten” corporate tax regime in 2008. Zero is the standard rate and certain banking, etc, entities are taxed at 10%. The stated goals for Jersey are to maintain its “competitive edge in the offshore financial services sector” because “Jersey has faced growing international competition from other offshore jurisdictions offering a zero per cent tax rate or a tax exemption for non-resident companies”.

    http://www.mondaq.com/jersey/x/71878/Corporate+Tax/ZeroTen+Corporate+Tax+Reforms+In+Jersey

    In other words multinations are not taking advantage of Jersey–Jersey is using their tax policy to attract multinationals. And clearly Jersey is not the only one. How can anyone logically blame a multinational like Apple for taking up what is freely offered?

  9. Kirk I have worked in customer service. I have handled many a contact from customers. Many of those customers come to the table with their own opinions and ideas. It was my responsibility to explain to them they are entitled to have their own opinions and ideas. When the company applies a process or rule, it does so trusting, many will benefit. There will always be some who believe certain processes or rules should be changed to suite their outcomes. It was my responsibility to explain why we were not able to cater to every process or rule each individual has. Many a time I was able to have the customer understand that.
    I agree a lot with what Chris and Craig have written. I remembered when Kerry Packer (World Series Cricket Fame) was hauled before the Australian Senate inquiry on the amount of tax he paid. Kerry argued any person who does not limit the amount of tax one pays, wants their head read. He also told the Senate inquiry, I do not see why I should pay you anymore. You do not spend it very well. Here Apple is reducing it tax paid within existing regulations. One can debate all day if this moral or immoral. The fact is the Multinationals work to minimise taxes as best as they can. If you believe this is immoral, take a Magna Carta stand with Government, you believe is at fault, for allowing it to occur, to change the regulations. It all comes back to Government and what they allow.

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