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Update: Apple Settles Tax Dispute with Italy

By Curtis C. Verschoor, CMA, CPA
February 1, 2016
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02_2016_ethicsupdate

The aggressive tax practices of Apple, Inc. have been widely criticized worldwide. Like several other multinational corporations, Apple declares large profits in Ireland even though its Irish holding company subsidiary, Apple Operations International (AOI) has no employees or physical presence in Ireland and is entirely managed and operated from the United States.

 

On December 31, 2015, the Irish Times reported on an agreement Apple has made with Italy to settle an Italian tax claim. The article, “Apple’s €318m tax deal may affect other multinationals in EU,” [http://www.irishtimes.com/business/technology/apple-s-318m-tax-deal-may-affect-other-multinationals-in-eu-1.2480665] reports that Apple’s settlement with Italy resulted from investigators not charging Apple “with fiscal fraud but rather with an incomplete [tax] declaration.” Google is reportedly due to pay a similar amount to Italian authorities for its payment of lower taxes in Ireland rather than to Italy. The European Union in Brussels has been active trying to harmonize European tax laws by exposing excessive funneling of profits to tax havens like Ireland.

 

Apple has also been criticized in the United States by the Senate Permanent Investigative Subcommittee for taking advantage of “loopholes over a four-year period from 2009 to 2012, to defer paying U.S. taxes on more than $10 billion of offshore income per year. As a result, Apple has continued to build up its offshore cash holdings which now exceed $102 billion.”

 

Congress should act promptly to harmonize international tax rules that would result in benefits to U.S. taxpayers.

 

For more on this story, see the July 2013 column, “Maximizing Returns or Unethical Tax Avoidance?” at http://www.imanet.org/PDFs/Public/SF/2013_07/07_2013_ethics.pdf

 

Curtis C. Verschoor, CMA, CPA, is the Emeritus Ledger & Quill Research Professor, School of Accountancy and MIS, and an honorary Senior Wicklander Research Fellow in the Institute for Business and Professional Ethics, both at DePaul University, Chicago. He also is a Research Scholar in the Center for Business Ethics at Bentley University, Waltham, Mass., and chair of IMA’s Ethics Committee. Trust Across America-Trust Around the World awarded him a Lifetime Achievement Award in 2016 as a top thought leader in trustworthy business. His e-mail address is curtisverschoor@sbcglobal.net.
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