Apple Controversy Reveals Murky Tax Strategies of Large Companies

Posted on May 29, 2022

Apple Controversy Reveals Murky Tax Strategies of Large Companies

Investigations into Apple Inc’s tax strategy reveal how the multi-national giant evaded taxes in the U.S. by creating an Irish subsidiary. Apple, which is based in Cupertino, California, paid close to no taxes in Ireland while making billions in profit. It is believed the Irish subsidiary of Apple has no employees.

Shifting income to low-tax countries is not illegal, it is a loophole within the U.S. tax code that Apple exploits to legally minimize its tax liability. “Low-tax trolling” is the term used to describe this strategy, and is done by many companies to reduce their taxes. It is a problem not only faced by the U.S., but many other countries.

The investigation has ignited controversy about the high corporate tax rate in the U.S. It is argued that reducing the nominal corporate tax rate on profits from the current 25 percent to 15 percent will reduce many companies from evading taxes.

After Ireland was deemed ‘a tax haven’ by the U.S. Senate, the country has been trying to repair its damaged reputation, and denies providing special privileges to Apple Inc. Even if Ireland did not provide special privileges to Apple, the company did find its tax laws more favorable.

The present controversy over Apple’s tax strategy and the temptation of tax havens might lead the U.S. to look into its own tax policies.

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