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A case study on the apples tax ethics issues in the united states

But how did it land in this mess, and who does it even owe money to anyway? As a result, Apple owes money to Ireland, but the country disagrees. As you might expect, Apple is also planning on launching an appeal.

Avoiding tax may be legal, but can it ever be ethical?

In one corner, the European Commission, a powerful international body with the backing of all the EU member states except Irelandwho are tired of having Apple pay very little tax on billions in sales. Apple Sales International and Apple Operations Europe are two Irish-registered companies, which hold the intellectual property to Apple products and brands outside of North and South America.

Using legal tax mechanisms, all sales of Apple products in Europe went to these companies, so the bulk of all profits made in Europe ended up in Ireland. The real problem is how profits were taxed once they got to Ireland.

So whose rules did Apple break?

Normally, tax evasion is pretty cut-and-dry: This is necessary to defend the integrity of our tax system; to provide tax certainty to business; and to challenge the encroachment of EU state aid rules into the sovereign Member State competence of taxation.

Tim Cook issued an open letter to customers this morning, seeking to reassure them. Cook points out that Apple has had a tangible presence in Ireland for decades, starting with a factory with 60 employees in Cork, Ireland back in 1980.

  1. Will Google face a similar backlash after their chairman's comments?
  2. The real problem is how profits were taxed once they got to Ireland.
  3. Apple Sales International and Apple Operations Europe are two Irish-registered companies, which hold the intellectual property to Apple products and brands outside of North and South America.
  4. Both companies and government need to pay more attention to communicating their position on this issue and their interpretation of the law — and above all they need to be open about it.
  5. Rather than hiding behind the business case for tax avoidance, businesses need to be transparent about their tax planning. But it could be argued that the corporations are piggy in the middle here.

According to the EC investigation, the head office exists on paper only. The fact that Apple was in accordance with Irish tax law is also a moot point. You can see the point: What about the US government?

  1. Normally, tax evasion is pretty cut-and-dry. What about the US government?
  2. Tax policies should be underpinned by the guiding ethical principles of accountability, transparency and consistency.
  3. The US Treasury Department has been unusually vocal about this case, in statements last week and also after the ruling was handed down today. Paying a fair amount of tax in the countries where they operate is seen as the socially responsible thing for companies to do.
  4. Tax as a social responsibility At a time when government spending cuts are having a real impact on the everyday lives of people, how can multinational corporations be avoiding paying their fair share of taxes?
  5. As you might expect, Apple is also planning on launching an appeal. Paying a fair share Many multinational companies, apparently operating very successfully in the UK, are paying little or no local corporation tax.

The US Treasury Department has been unusually vocal about this case, in statements last week and also after the ruling was handed down today. After the international hand-wringing is done, Apple is highly unlikely to just sit down and pay up.

Both Apple and Ireland have said they will appeal the decision.

But there is also a very good chance Apple ends up paying some money from this. Ireland and the United States may well disagree with the ruling, but public opinion in the 27 other EU member states is on the other side.