Reportedly, Apple owes Ireland $US14 billion in unpaid taxes, plus interest. Not that Ireland seems to want the reputational risk involved in the terrifying role that the European Commission has just landed it with. Yikes. In the wake of Brexit, Dublin had been hoping to displace London as Europe’s citadel of commerce. Instead, it is being handed the job of being the tax sheriff enforcing the law on the same multinationals it was aiming to serve.
Amusing as it is to watch Ireland furiously back pedalling away from the multi-billion tax windfall that the European Commission is trying to toss into its lap, the revelations about Apple’s tax go-round are grim reading. As Bloomberg News pointed out yesterday, firms routinely start out wanting to be (a) good corporate citizens while (b) simultaneously managing their tax affairs to the maximum benefit of their shareholders. Problem being, those two impulses are rarely compatible. In the end, Apple’s compliance with any sustainable version of international tax law looks more like Bill Clinton’s adherence to the ‘forsake all others’ bit in the vows of matrimony.
Apple was not merely shifting profits around to low tax jurisdictions. (That’s arguably OK, right? Even Bono does it.) What Apple was doing was shifting profits to a tax jurisdiction that didn’t exist. That has proved to be a step too far, even for the EU with all of its homegrown Swiss, Dutch and Liechensteinian tax dodges. Here’s how the European Commission sought to name and shame Apple in their press release earlier this week:
Apple set up their sales operations in Europe in such a way that customers were contractually buying products from Apple Sales International in Ireland rather than from the shops that physically sold the products to customers. In this way Apple recorded all sales, and the profits stemming from these sales, directly in Ireland.
So far, so Bono. But then came this:
Under the agreed method, most profits were internally allocated away from Ireland to a “head office” within Apple Sales International. This “head office” was not based in any country and did not have any employees or own premises. Its activities consisted solely of occasional board meetings. Only a fraction of the profits of Apple Sales International were allocated to its Irish branch and subject to tax in Ireland. The remaining vast majority of profits were allocated to the “head office”, where they remained untaxed.
Wowee. First you say its all OK because we’re routing everything to Ireland and paying tax there, but then the profits vanish into a virtual ‘head office’ that’s situated nowhere, or only in cyberspace. This kind of thing makes Kim Dotcom – even in the worst incarnations dreamed up by the US – look like a total piker. Google achieves similar low tax outcomes as Apple, as explained here.
Amazon also paid ridiculously low levels of tax in the United Kingdom last year – it took in 5.3 billion pounds sterling from British online shoppers last year but recorded profits of only 34.4 million pounds and paid only 11.9 million pounds in tax. Starbucks has been coming under flak in the UK for recording similar tax outcomes.
In the wake of the European Commission findings about Apple, both the US and Ireland have vociferously appealed, with the Americans claiming that the European Union is suddenly and unfairly targeting US firms. Hardly. The EU had signalled its intention to crack down on these practices more than three years ago.
Hopefully, the days when multinationals can cheerfully funnel their sales out of economies all around the world – thus avoiding tax on any consequent profits – are coming to a close. It can’t come soon enough. As things stand, individual New Zealanders are being required to pay GST on their online purchases. Yet the corporate likes of Amazon, Google and Apple are being allowed (by our government to continue their plunder here, virtually at will. For example:
In its 2015 financial year, Apple Sales New Zealand earned $732 million in revenue. But its financial statements show $701m of that was gobbled up by the cost of sales here – leaving just over $30m in profit.
It paid tax on that profit of $8.9m. All up, Apple has paid just $27.2m in tax in New Zealand over the last five years – less than one percent of the $2.8bn it has made in revenue in that time.
GST is running at 15 %. Apple is paying one per cent on its gross revenue here, at best. Hey, it only takes one bad Apple to spoil things for everyone.
Invite Trump in Mexico
Poll ratings at rock bottom levels? Invite the Donald! Mexico’s president Enrique Pena Nieto has approval ratings languishing down around 23%. What can possibly make him look good? Standing up for the good of Mexico against that most hated of all gringos, Donald J. Trump. Simultaneously, what can make Trump earn sympathy votes back at home? Making his immigration case in person, right in the face of that swarthy fellow from south of the Rio Grande. Having trouble imagining Trump as President? Look, he’s on a visit to Mexico… and he’s looking presidential. Shaking hands and stuff.
In other words, today’s meeting between Trump and Pena Nieto is a love/hate match between two of the most despised politicians in the region. It can only be up from here for both of them. Can Andrew Little invite Trump to Labour’s annual conference, and argue with him?
Angel Olsen, On Tour
Angel Olsen will be touring here in December, behind her new album, My Woman. In her mini-interview this week with RNZ’s Nick Bollinger, Olsen still managed to pack in a number of complex ideas : such as her love of metaphor and ambivalence, and of art that conveys the micro shifts in commitment we all experience, even at times of emotional extreme. (She’s always been great at conveying the amusing side of emo’s operatic extravagances.) What this means is that…during the gigs at San Fran and at the Kings Arms in December, you may need to get right up the front to read those flickering changes in her face. They’re very evident in in this clip I’ve linked to before:
On the new album, Olsen steps right away from the “folkie gal with guitar” stereotype that has always sat rather awkwardly on her shoulders. On this nine minute song from My Woman, she pursues commitment, but on her own terms : I want to live life/ I want to die right / Next to you….and still finds time for some guitar shredding at the end.
Finally. there’s her love of metaphor…on this earlier track, she took Miranda, the US Supreme Court protection against self incrimination, and used it as an analogy for emotional distance. Funny, but she also meant it, man.