Questions about Apple’s tax activities led to the discovery that the company used shell companies based in Ireland to keep a large part of its profits in Ireland in order to evade taxes in the U.S.
Irish Prime Minister Enda Kenny, who was attending an EU summit on tax evasion said, “Ireland’s corporate tax rate is statute-based, very clear, very transparent, and we do not do any special deals with any individual companies in regards to that tax rate.” He added that the European Commission did not inform his government about the discussions on Ireland’s corporate tax rate.
Apple is suspected of evading billions in taxes by keeping profits earned overseas in overseas bank accounts. It is accused of using loopholes in the tax code to minimize its tax liability. However, Apple is not alone; HP and Microsoft are also under investigation for the same activities.
Efforts to bring down tax evasion have increased. The IRS is looking to limit tax evasion through various methods, including the Offshore Voluntary Disclosure Program (OVDP), and investigations into the financial transactions of U.S. taxpayers overseas. Swiss banks are already sharing financial information with the U.S.
With these efforts making headlines, it will certainly make a psychological impact on taxpayers.