How Apple Sidesteps Billions in Taxes

How Apple Sidesteps Billions in Taxes –summary-

Yoichi Horibe

I would like to talk about modern tax problem by using tax breaks afforded as an example. At first, Apple constructs an office in Reno to avoid high tax rates.  Reno is a kind of tax haven for low taxations. High technology companies tend to use tax haven to avoid paying tax. Recently, these kinds of companies like Google, Amazon, and Microsoft have been using royalties on intellectual property.

On the other hand, non-tech companies like Wal-Mart have to pay a tax rate of 24 percent which is about average for this kind of industry. They would try to use tax havens too. For example, hedge fund tends to use tax haven‘s money when they need large money for mergers and acquisitions. Hedge fund would specialize in this method rather than tech companies.

Basically, Apple’s employees are Americans who live in United States because they specialize in making i-pods. If they can earn money by the royalties, they don’t have to go all over the world to sell i-pods by oneself.  For example, Luxembourg is a good place to avoid tax. That is roughly 20 percent of iTunes’s worldwide sales. However, they also implement lobbying campaigns because they want to sell the products in their place too.

Unfortunately, there are so many criticisms about Apple’s tax breaks. Even though Apple uses legal methods, however their annual report doesn’t show how much tax they paid government. In addition, the government doesn’t show how they use the tax for local facilities.  Local facilities which couldn’t receive government‘s benefit are exposed. Apple always shows exaggerated figures but it is not reliable guides to what is actually paid.

In conclusion, I think this is a kind of money game. Actually, local businesses have been victims of the game thought they are not a player. Apple said” We have contributed to many charitable causes.” However, I think this is wrong because the game player must pursue to their profit for their shareholders. The most important thing is to revise each annual report for local business, I guess. If the structure of the game is pretty good, this world would be better and fairer.