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Apple didn't pay tax in the UK last year, and it's ok, apparently

Karen Haslam | July 4, 2013
Tax reported by Apple's UK subsidiaries in 2011 was £11.4m, but in 2012 Apple paid no UK corporation tax.

Why Apple doesn't pay tax in the UK
As for the UK, Apple isn't taxed on its operating profits in the UK because operating profits are not what are taxed: profits before tax are what are taxed, explains Forbes.

And, according to the FT, Apple's UK audience accounted for less than 10% of overall sales.

Regarding the fact that Apple offset tax deductions relating to share schemes of £27.7m against its corporation tax liabilities in the UK, Forbes explains: "Issuing stock to the management is a part of doing business", it is an "allowable expense" and "something that every company does."

Apple defends offshore tax strategy
Apple came face to face with the US senate in May when it was questioned over its tax practices.

Apple CEO Tim Cook defended the company before a Senate subcommittee, saying that Apple uses no "tax gimmicks" in assigning about two-thirds of its worldwide profits to three subsidiaries in Ireland, where the company has negotiated a corporate income tax rate of less than 2 percent.

The company has been under fire for its tax practices for some time. Last year a New York Times report claimed that Apple uses offices in states other than California, where it's headquartered, and countries outside the US to help minimize its overall tax burden.

The report pointed to Apple's subsidiaries in Luxembourg, Ireland and the British Virgin Islands, and claimed that some are "some little more than a letterbox or an anonymous office - that help cut the taxes it pays around the world."

"Apple was a pioneer of an accounting technique known as the 'Double Irish With a Dutch Sandwich,' which reduces taxes by routing profits through Irish subsidiaries and the Netherlands and then to the Caribbean," claimed the report, a practice that it claims is now imitated by a number of companies.

Apple responded to a New York Times report claiming that it is "among the top payers of US income tax" and also that it is among the top creators of American jobs.

Back in February, the British, French and German governments launched a joint initiative to crack down on tax avoidance and stop big firms that "country-hop to pay less tax".


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