01 Jun Apple refuses to appear before European Parliament
GUE/NGL MEPs have slammed the refusal by representatives of Apple to appear before a hearing of the European Parliament’s TAX3 committee (special committee on financial crimes, tax evasion and tax avoidance) scheduled for June 21.
Irish MEP Matt Carthy said: “Today the TAX3 committee has received a letter (2060 – Letter to TAXE3 Committee – May 2018_) from Apple declining our request to the company to appear before MEPs as part of a hearing aimed at examining the revelations related to multinational companies contained in the Paradise Papers leak from law firm Appleby.
“MEPs from across the political spectrum are outraged at this snub from Apple, a company that has many questions to answer. Apple claims the reason it refuses to attend is based on the fact it is appealing the Commission’s state aid ruling against Ireland. This excuse doesn’t hold water.
“This hearing was aimed at examining the revelations regarding Apple contained in the Paradise Papers, which relate to the company’s corporate structure in Europe post-2014 and have nothing to do with the state aid case. By its response, Apple is basically saying it will refuse to engage with elected representatives in Europe until the appeal process is over, which may take several years. So much for its claims of improving its democratic accountability on tax matters.”
Apple went jurisdiction-shopping following the 2013 US Senate Inquiry into its tax avoidance schemes and specifically its use of three Irish subsidiaries to avoid paying tax.
The Paradise Papers show that its lawyers, Baker McKenzie, sent a questionnaire to Appleby representatives in 14 different tax havens in 2014 brazenly requesting if they could confirm that the use of the Double Irish structure could work in these jurisdictions.
Specifically they requested that these Appleby offices ‘confirm that an Irish company can conduct management activities (such as board meetings, signing of important contracts) without being subject to taxation in your jurisdiction’.
Apple settled on Jersey – but this structure would have been impossible had the Irish government actually abolished the Double Irish in 2014.
Instead, the Irish Finance Minister gave in to corporate lobbyists in October 2014 and provided not only a very long phase-out period for existing companies until 2020, but also a grace period that would allow new companies to form until December 2014 and use the Double Irish until 2020.
This allowed Apple to relocate the ‘management and control’ of two out of three of its Irish subsidiaries – Apple Sales International and Apple Operations International – to Jersey in order to continue exploiting the notorious Double Irish scheme until 2020.
And what happened to the third Apple Irish subsidiary, Apple Operations Europe? It moved its intellectual property onshore in order to take advantage of the new intellectual property regime introduced by the Irish government as the Double Irish phase-out announcement was made, which was almost certainly the cause of the 26% GDP growth rate in Ireland in 2016.
Since 2015 there has been a surge in corporations using intellectual property-related tax avoidance schemes. Tax advisors openly advertised that as a result of the capital allowance on intangibles introduced in 2015, up to 100 per cent IP-related trading profits can be offset in an accounting period, meaning the effective tax rate paid on IP can be reduced to zero.
A US expert cited in the New York Times estimates that Apple transferred $200 billion onshore in order to claim these overly generous tax deductions, and that as a result, any income Apple now generates in the Irish state could be partially offset by more than $13 billion in tax deductions every year for 15 years.
In 2017 the Irish government announced it would introduce a cap on this capital allowance of 80%.
“The Paradise Papers revelations suggest the effective corporate tax rate paid by Apple post-2014 continues to be extremely, extremely low,” Carthy said.
“GUE/NGL MEPs will be pushing for the European Parliament to revoke the lobbying access badges to the European Parliament of all Apple representatives until it changes its approach towards engagement with democratically elected representatives.
“We have also commissioned a study to be published on the day Apple was supposed to appear before MEPs in the TAX3 committee, June 21, that will examine the effective tax rate paid by Apple after 2014, and the company’s current corporate structure.”