Protesters took over Apple’s Regent Street store yesterday and played Irish folk music to protest the technology company’s tax avoidance schemes.
Apple pays an effective tax rate in the UK of 1.9% after funnelling its UK profits through its Irish subsidiary in a legal tax avoidance scheme. The US technology giant is reported to have organised an especially low tax rate with the Irish government to further reduce its tax bill in that country.
Apple’s tax avoidance schemes, known as “iDodge”, have met with recent controversy on both sides of the Atlantic recently, with the US government taking particular exception to one of its subsidiaries called Apple Operations, where the company funnelled $22 billion in 2011, only paying $10 million in taxes on that sum, as the subsidiary has no registered tax jurisdiction at all – not even Ireland.
Governments around the world are starting to take notice of the large-scale tax avoidance schemes increasingly being employed by major corporations, most notably US-based technology companies such as Apple and Amazon. As countries compete to offer lower tax rates, enticing companies to base themselves there, these same companies are finding the loopholes in taxation laws and paying very little if any tax at all.
Whilst it is easy for government ministers to complain at how these companies have lost their morals, companies exist to make profits for their shareholders not the countries in which they are based. It is up to governments around the world to work together to close these loopholes and tax havens, and force companies to pay the tax bills they owe.
