Apple is getting some flack for being caught shifting profits earned in Australia to a subsidiary based in Ireland. The reallocation of assets is not technically illegal, but it has allowed the Cupertino-based tech giant to successfully avoid paying taxes associated with $9 billion in earnings.
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Apple under the microscope for profit-shifting scheme

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Apple is getting some flack for being caught shifting profits earned in Australia to a subsidiary based in Ireland. The reallocation of assets is not technically illegal, but it has allowed the Cupertino-based tech giant to successfully avoid paying taxes associated with $9 billion in earnings.

Apple Sales International was established as part of a scheme that allows the secondary company to claim partial ownership of Apple’s intellectual property rights. When Apple products are sold abroad, Apple Sales International collects intellectual property rights from Apple’s international arm, which over a decade has added up to untaxed profits in nearing $10 billion.

While the practice seems a bit shady, it’s far from uncommon. Huge international corporations all participate to some degree in these sort of reallocation schemes, in many cases to avoid taxation. It’s also not the first time Apple has been accused of such practices. In 2013, a subcommittee of the Senate uncovered $74 billion in untaxed revenue leaving the US at the hands of the very same Irish subsidiary.

Despite plans to transition to a new CFO later this year following the announcement of Peter Oppenheimer’s looming retirement, most in the industry believe the current tax scheme will stick even after its architect departs. Legal or not, Australia wants their cut of the money Apple has shifted oversees. The government will reportedly pursue actions to recover some or all of the potential tax revenue.

[via Australia Financial Review]

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