Hacker News Reader

Comment by CamperBob2 | Hacker News Reader

As usual for headlines that contain phrases like "takes apart," "utterly debunks," or "totally destroys," the tax expert's response does absolutely none of the above. Not a single factual assertion in Cook's letter is contradicted.

There should be an axiom comparable to Betteridge's Law for this sort of headline.

View on HN

I think it's quite clear that Apple has a tax rate of 0.005% instead of the normal 12%.

Can I also get such a discount? What about if I start a company, can I get it then?

It's true that I don't hire thousands of employees, but I'm not rich to the tune of hundreds of billions either.

It's all about proportions really. Let's all pay 0.005% tax and see everything turn to crap around us. But we'll be rich!

Is it really clear?

I didn't quite get it... 0.005% of what? Profit on sales in Ireland? Profit on sales in other parts of the world?

Oh, I get it, the sum of those two.

Are people complaining that when Apple sells a phone in Italy, Ireland taxes that at zero? Is that the complaint?

Apple considers that all sales across Europe actually happen in Ireland, so taxes on profit on sales in the whole EU are paid in Ireland. That part is perfectly legal within the EU.

The issue is that the normal tax rate in Ireland is around 12%, and Apple uses accounting tricks and tax exceptions to lower their effective tax rate there to 0.005%. That is the part that the the European Commission ruled illegal.

Effectively they argue that, in EU countries and India and Africa, the profit happens in Ireland. This is done through transfer pricing.

In Ireland, they argue that the profits happen at a "head office" which was not based in any country and did not have any employees or own premises.

(The ruling: http://ec.europa.eu/competition/state_aid/cases/253200/25320... linked from http://ec.europa.eu/competition/elojade/isef/case_details.cf...) - search for "AOI"

You could have done it just a few years ago. The international tax rules are tightening though, so you've missed the boat.

Agreed - the title is bombastic fluff, however, some interesting points are made. Though the strongest one just paraphrases of the opening paragraph of the EC press release (http://europa.eu/rapid/press-release_IP-16-2923_en.htm).

The biggest problem I have with Tim Cook's position is the sovereignty argument. I would stay away from it for now, and let the interested parties pick it up.

Tim Cook: "This would strike a devastating blow to the sovereignty of EU member states over their own tax matters, and to the principle of certainty of law in Europe".

What about the assertion regarding how much of the profits are taxed in the US?

Here's an (old) discussion of some of the major points in understanding that question: http://www.forbes.com/sites/timworstall/2012/11/01/so-how-mu...

I haven't seen an explanation of where that 0.005% number comes from, but I would be unsurprised to find similar forms of confusion in it.

The EC's press release is pretty clear on where the number comes from, and I do not see any such forms of confusion there: http://europa.eu/rapid/press-release_IP-16-2923_en.htm

Ah, I see. So what they're saying in this case is that 0.005% is the fraction of Apple's global non-US profits that was paid as tax in Ireland.

That's not the same thing as saying it was "a 0.005% tax rate". The issue is over what fraction of the non-US profits are taxable in Ireland, not over the tax rate.

Whoa, I don't think they're saying that. "Apple Sales International" is not all non-US profits. It's a company buying Apple products from contract manufacturers in other regions and selling them in Europe. It would not be recording any revenue from sales in other regions.

The profits would then be the difference between the cost they bought those products for (+ things like the very substantial payments to Apple US for R&D), vs what they sold those products for.

Yeah, like the bit where he says that apple does not pay the "fair share". There is no such thing. Either you pay what is required by law or you don't. Especially if what they said about being the largest taxpayer in Ireland is true. I feel about it this way - if you rented an apartment for $1000/month, and you had a room mate that paid $900 a month, why does it matter that it's only 0.00001% of his income, while the remaining $100 is 20% of yours? Could anyone say that that other room mate is somehow not paying his fair share of the rent, since it's such a minuscule percentage of his earnings?

The law says they have to pay 12%. They pay 0.005% because the Irish goverment is giving them special treatment.

No thanks, pay the 12% like everyone else or take your 6000 workplaces and shove them.

> Either you pay what is required by law or you don't.

And according to the EC, they don't

That's not precisely accurate. The EC's ruling is that the Irish government changed the law in an unlawful way. There has not yet been an explicit ruling on Apple's conduct, as far as I know - that's likely to take more time (years...) to happen.

> That's not precisely accurate. The EC's ruling is that the Irish government changed the law in an unlawful way.

The ruling is that the Irish Government applied wrongly the actual law, no law has been changed

> There has not yet been an explicit ruling on Apple's conduct, as far as I know - that's likely to take more time (years...) to happen.

The investigation is not on Apple, but on the Irish Government. My comment about illegality was about the Irish Government practices, not about Apple.

Reply on news.ycombinator.com