Is Apple a Leader or a 21st Century Pirate?

Disclosure: I like Apple products. I don’t like that Apple the corporate entity engages in BEPS* on a grand scale and is currently hiding something like $US 128b of earnings that have not been taxed equitably. As some wag put it there is more innovation in Apples’s tax arrangements than in their products.

BEPS is

“Base erosion and profit shifting (BEPS) refers to tax avoidance strategies that exploit gaps and mismatches in tax rules to artificially shift profits to low or no-tax locations.”

 
Two years ago John Campbell of Radio NZ tried to follow the trail of taxes paid on NZ revenues.

“John heard that for the financial year ending 27 September 2014, Apple New Zealand had revenue of $568 million and paid tax of only $6.8 million, he was really confused. How? Why? The answer, it seems, is in Apple New Zealand’s cost of sales – $551 million. That’s 97% of their revenue.”

 
So either New Zealand is a very expensive place to do business or something else is going on. You can listen to the podcast below. RNZ link if player does not display.

In March of this year – Matt Nippert did an update on the story. Titled: Apple pays zero tax in NZ despite sales of $4.2 billion
 

“Consumer electronics giant Apple paid no income tax to Inland Revenue over the past decade despite selling billions of dollars worth of iPhones and iPads to New Zealanders.

The revelations about Apple’s local tax bill – in addition to international concerns about its use of havens such as Ireland – have sparked concerns a recently announced government crackdown on multinational tax avoidance may not go far enough.

Green Party co-leader James Shaw said Apple was not paying its fair share.

“It is absolutely extraordinary that they are able to get away with paying zero tax in this country. I really like Apple products – they’re incredibly innovative – but it looks like their tax department is even more innovative than their product designers,” Shaw said.”

 
Today in the NYTimes there is another story on Apple the bad corporate citizen.

After a Tax Crackdown, Apple Found a New Shelter for Its Profits

“Apple has accumulated more than $128 billion in profits offshore, and probably much more, that is untaxed by the United States and hardly touched by any other country. Nearly all of that was made over the past decade.”

 
This week we are learning more about the secret tax affairs of big businesses who are mostly dodgy and not fit corporate citizens at all. Apple is just one of the biggest of a bad bunch. BEPS law aims to change all that but legislation can’t compensate for ethics and when the tax rules change the same dodgy law firms will make some new arrangements.

“Appleby is a member of the global network of lawyers, accountants and bankers who set up or manage offshore companies and accounts for clients who want to avoid taxes or keep their finances a secret from authorities, business partners or even spouses. The firm did not respond to questions from The Times about its work for Apple or other companies.”
….
“European regulators are trying to force countries including Ireland, Belgium, Luxembourg and the Netherlands to collect back taxes from big companies that relied on offshore arrangements. Apple is being pursued for $14.5 billion in back taxes after European regulators ruled that its old tax structure amounted to illegal state aid from the Irish government.”

 
Apple used to have an aspirational brand. A brand that was all about being the best you can be but by becoming a 21st Century pirate that stiffs the tax departments of many of the countries that it trades in it is in danger of becoming a despised brand.

What Apple (are doing) and the other big companies mentioned in the NY Times story and in the other stories about the Paradise Papers stories is dishonourable, unethical and dishonest.

Personally I don’t want to keep buying products from a company that so disrespects all its customers and the host nations who allow it to function and benefit from local infrastructure and services.

Apple corporate has a big opportunity here to become a corporate leader and to do the right thing by paying some tax and unravelling the sophistry and deceitfulness surrounding its tax affairs. Go on Apple – wake up and do the right thing.