Apple Siphoned $8.9bn Profits to Ireland Over Past Decade to Avoid Australian Tax

Apple has siphoned $8.9bn in profits away from Australia where it was earned, to commercial subsidiaries in Ireland in order to avoid paying any tax on it.

Apple reported just $88.5m in pre-tax earnings in 2013 in Australia, but sent $2bn of income to Ireland via Singapore in the same year, according to a report by the Australian Financial Review (AFR).

In Singapore, Apple negotiated a secret tax deal in 2009, added AFR, citing documentation covering the company's estimated income from 2002 to 2013 from Apple Sales International, an Irish company that manages Apple's tax matters.

Apple Sales International has reported more than $100bn in profits over the last five years.

The company "extracts the bulk of Apple's huge profits on sales outside the United States, which it claims as payments for intellectual property and intangibles," according to the AFR.

However, the Irish-domiciled company has never filed its financial returns with the Companies Registrations Office in Dublin.

Global corporations don't pay tax because they make deductible payments of interest and royalties and the like to affiliates in tax havens like Ireland and Switzerland.

Ireland with its relaxed tax laws and impressive roster of US technology company hubs has become something of a global miscreant.

Tax expert Lee Sheppard describes Ireland in this equation as a "way station" for deductible payments: "a kind of tax laundry used to reduce taxable income".

Stopping Tax Avoidance

Australia's shadow treasurer, Chris Bowen, blamed the federal government for not doing enough to counter tax avoidance by multinational companies.

"It's not fair to other Australian businesses that do pay their fair share of tax if some companies are able to shift profits around to avoid tax," Bowen said.

Meanwhile, trade minister, Andrew Robb, said his government is committed to closing tax loopholes, and finance minister, Mathias Cormann, said the government is working through the G20 to stop international tax loopholes.

The accusations against Apple comes as the G20 meeting in Sydney last week formulated rules to exchange information automatically on tax matters among its members by the end of 2015 amid rising complaints of tax dodging by multinational companies.

The meeting gave US tech giants Google, Microsoft and Apple a deadline to reform their tax arrangements.

The G20 communiqué said the group is committed to Base Erosion and Profit Shifting (BEPS) based on sound tax policy principles, allowing for taxing companies at the place where economic activities deriving profits are performed and where value is created.

Elsewhere, the EC's expert group on the taxation of digital companies operating in Europe will report its findings to the commission on June 14.