Tax to Apple is clearly a dirty word
Do large corporates such as Apple have a moral responsibility to pay their fair share of taxation? The Financial Review has in recent days finally been able to put some order of magnitude around just how little tax Apple is paying in Australia and the rest of the world.
Apple has shifted an estimated $8.9 billion in untaxed profits from its Australian operations to a tax haven structure in Ireland in the last decade. Last year Apple reported pretax earnings in Australia of only $88.5 million after it sent an estimated $2 billion of income from its Australian sales to Ireland via Singapore. It does all this through company Apple Sales International, which appears an amazingly simple vehicle for shuffling $’s earned outside the US into a big black hole that no particular country seems to shine a light on. Apple Sales International gets hold of the cash by charging a premium for Apple’s intellectual property. Simple. Apple depends on the ignorance of a host of countries seemingly locked into the old world.
Sadly, it appears not to break any particular law, it simply deliberately falls between the ever widening cracks of international tax jurisdictions. However, it is morally disturbing and greatly insulting. Apple Sales International reported more than $US100 billion ($112 billion) of profits in the last five years. Its accounts show it has paid less than 50 cents in tax on every $1000 of that income. That is not 50 cents in the dollar, that is 50 cents in a $1,000. And for our tax coffers Apple Australia paid just 0.7 per cent of its turnover as tax. By comparison Australian companies are taxed nominally at 30 per cent and they pay on average 27 per cent.
In a time when we are hearing that the Government cannot afford to fund necessary infrastructure and social services, every dollar in tax lost or gained is critical. When we all have to pay our fair share of taxes to fund necessary public amenities, should we not be demanding a little more respect from Apple.
Sadly, most Australian consumers will simply cop it on the chin, keep buying Apple products and keep paying taxes. There is some sense that if consumers believe their decision to stop buying or using Apple will actually have an impact on Apple’s bottom line, they are more likely to boycott the brand. Unfortunately, however, consumers often think that their individual efforts will not have significant impact on the brand. More importantly, when consumers really like a brand they are less likely to boycott it, as they believe the opportunity cost too much.
Personally I find the whole scenario very challenging. I think Apple should be shamed into paying tax, but the shame of it all is I will probably keep buying their products.
What about you?