The New York Times is following the worldwide trend of exposing\u00a0companies\u00a0who are very clearly structuring their affairs to make sure they do not pay the tax that any reasonable\u00a0person\u00a0would expect them to owe based on where they're based, where they make their\u00a0product\u00a0and where they sell it.<\/p>\n
As they point out today<\/a>:<\/p>\n Even among tech companies, Apple\u2019s [tax] rates are low. And while the company has remade industries, ignited economic growth and delighted customers, it has also devised corporate strategies that take advantage of gaps in the tax code, according to former executives who helped create those strategies.<\/p>\n Apple, for instance, was among the first tech companies to designate overseas salespeople in high-tax countries in a manner that allowed them to sell on behalf of low-tax subsidiaries on other continents, sidestepping income taxes, according to former executives. Apple was a pioneer of an accounting technique known as the \u201cDouble Irish With a Dutch Sandwich,\u201d which reduces taxes by routing profits through Irish subsidiaries and the Netherlands and then to the Caribbean. Today, that tactic is used by hundreds of other corporations \u2013 some of which directly imitated Apple\u2019s methods, say accountants at those companies.<\/p>\n Without such tactics, Apple\u2019s federal tax bill in the United States most likely would have been $2.4 billion higher last year, according to a\u00a0recent study<\/a>\u00a0by a former Treasury Department economist, Martin A. Sullivan. As it stands, the company paid cash taxes of $3.3 billion around the world on its reported profits of $34.2 billion last year, a tax rate of 9.8 percent.<\/p><\/blockquote>\n Now Apple will say - and I'm sure they're right - that all of that is legal.<\/p>\n And I will say - and I'm sure I'm right - that it's also profoundly unethical. They may disagree, but I'm equally\u00a0confident\u00a0most of the world would not side with them.<\/p>\n Tax is the fee companies pay for their licence to operate - even John Cridland, director of the CBI said so recently, I'm pleased to note (people used to\u00a0criticise\u00a0me for doing so, which makes his use of my language all the more pleasurable). As he said only a week or so ago<\/a>:<\/p>\n Companies completely accept that paying taxes is part of doing business. It\u00a0gives them their broader license to operate, and enables them to play a full role\u00a0in society \u2014 and be recognised for doing so.<\/p><\/blockquote>\n Well, clearly Apple and a host of\u00a0other\u00a0companies\u00a0do not agree with him. They instead hide behind the\u00a0consolidated\u00a0form of\u00a0multinational corporations\u00a0financial statements to make sure we have no clue what they really do and where. As the New York Times also says:<\/p>\n Apple does not disclose what portion of those payments was in the United States.<\/p><\/blockquote>\n I could add, or anywhere else come to that. And this is the problem. Consolidated accounts - which\u00a0remove\u00a0from view all the\u00a0transactions\u00a0that take place within a\u00a0multinational corporations (which are estimated to make up 60% of world trade) mean we have no idea of the real geography of sales, costs, labour spending, profits, finance costs, profits, tax paid and much else within\u00a0multinational corporations. All we do know is that\u00a0tax\u00a0is not paid - which is a mighty\u00a0convenient\u00a0outcome\u00a0for for\u00a0those\u00a0companies.<\/p>\n The answer is, of course,\u00a0country-by-country reporting, the form of accounting I created nearly a decade ago now. There are full details here<\/a>. With\u00a0country-by-country reporting we'd know:<\/p>\n * \u00a0Where Apple made its sales;<\/p>\n * \u00a0Where it incurred its costs:<\/p>\n * \u00a0Where it employed its people:<\/p>\n * \u00a0Where it recorded its profit;<\/p>\n * \u00a0Where it did, and as importantly, did not pay its taxes;<\/p>\n * \u00a0And, most\u00a0importantly, how it used intra-group transactions to shift all this around.<\/p>\n And if in doubt - we'd also expose tricks like using Ireland and Nevada as sales bases as sales would have to be disclosed on both a source and\u00a0destination\u00a0basis i.e. not just that they're made from Ireland but where they go to.<\/p>\n Apple is just one of the countries in the world abusing the world's tax systems. It does so with the\u00a0proactive\u00a0help of almost all the major accounting professional bodies - who oppose\u00a0country-by-country reporting - and the decided support of the Big 4 accountants - who are vehemently opposed to increasing accounting disclosure (an odd paradox you'd have thought). They're also aided right now by the OECD - who can't see how having this information could possible help tax collection - which is baffling, to say the least.<\/p>\n But\u00a0country-by-country reporting is making progress despite that\u00a0opposition\u00a0of the vested interests that favours tax avoidance that shifts tax onto ordinary people - as must be happening here. The European Parliament<\/a> and\u00a0Council\u00a0of Europe<\/a> have both called for full\u00a0country-by-country reporting in the\u00a0last\u00a0two weeks. The battle for it is far from over - but the moral case for it is being won, day in and day out and those\u00a0who\u00a0oppose it are daily being seen as those who oppose fair taxation and who oppose\u00a0transparency\u00a0and\u00a0accountability.<\/p>\n Their day is not over.<\/p>\n But it will be.<\/p>\n","protected":false},"excerpt":{"rendered":"