US Senate accuses Apple of avoiding $9B in US taxes using offshore affiliates

GlobalPost
Updated on

The US Senate Permanent Subcommittee on Investigations has released a report accusing Apple Inc. of exploiting loopholes to avoid paying $9 billion in US taxes in 2012.

The report said the Cupertino, Calif.-based tech company shifted billions in profits into affiliate companies based in Ireland, where it pays a tax rate of less than 2 percent.

One Ireland-based Apple affiliate, called Apple Operations International, made $30 billion in profits between 2009 and 2012, but did not file a corporate tax return or pay income taxes to any country, the subcommittee report said.

The report also noted that Apple has stashed $102 billion of its $145 billion cash stockpile in offshore accounts, BBC News reported.

Apple’s CEO, Tim Cook, testified at a Congressional hearing on the matter on Wednesday.

“We pay all the taxes we owe -- every single dollar,” Cook told the Senate Permanent Subcommittee on Investigations. “We not only comply with the laws, we comply with the spirit of the laws.”

Cook answered questions from senators for nearly two hours, at times arguing with them, according to Bloomberg News.

In a statement released before the hearing, Apple said it “does not use tax gimmicks” to avoid taxes. It also noted that it is one of the biggest taxpayers in the US, sending $6 billion to the IRS last year.

“Apple executives want the public to focus on the US taxes the company has paid, but the real issue is the billions in taxes it has not paid,” Sen. Carl Levin, a Michigan Democrat, said.

“You point out, and accurately so Mr. Cook, that 95 percent of the creativity that goes into those products is in California,” Levin said at the hearings. “But two-thirds of the profits, in Ireland.”

“Senator, we’re proud that all of our R&D or the vast majority is in the United States,” Cook responded.

Across the pond, Irish officials denied that Ireland is a tax haven for multinational companies. "They are not issues which arise from the Irish taxation system,” Ireland’s Deputy Prime Minister, Eamon Gilmore, told Ireland’s RTE News. "They are issues which arise from other jurisdictions. That's an issue which has to be addressed, first of all, in those jurisdictions.”

More from GlobalPost: Tim Cook says China set to become Apple's biggest market (VIDEO)

Sign up for our daily newsletter

Sign up for The Top of the World, delivered to your inbox every weekday morning.