Apple is the nation’s most profitable technology company and yet it managed to avoid paying billions in taxes in the United States and across the globe via a network of subsidiaries that were set up all over the world. This was according to a bipartisan group of lawmakers.
The probe on Apple’s tax shelters could lead to an explosive confrontation between the Congressional investigators and Apple’s chief executive Timothy D. Cook. A public hearing was set on Tuesday. The probe showed that some of Apple’s subsidiaries had no employees and were run by executives from the company’s headquarters in California. They were based in places such as Ireland that make them exempt from taxes, file for tax returns, and record keeping laws.
Lawmakers called them schemes that made Apple avoid taxes on billions of dollars it earned overseas in recent years. Last year, international operations accounted for 61 percent of the company’s total revenue.
In recent months, European authorities revealed the tax avoidance strategies used by Starbucks, Google, and Amazon. The companies were criticized by the public and several European governments discuss measures to close the loopholes.
The findings about Apple’s tax shelters were remarkable due to the huge amount of money involved and the assertions made by the company that its subsidiaries are not reachable by any taxing authority. The company’s strategy is rare in its scope and effectiveness. It showed the loopholes within the American corporate tax code. It also showed how hard it is for Washington to overhaul the tax system.
At least $74 billion were taken out of reach of the Internal Revenue Service from 2009 to 2012 according to the investigators. The cash was keep overseas. Last year, the company paid $6 billion in taxes in the United States with regards to its American operations.
