Paradise Papers Reveal Apple’s Secret Tax Hideout

The recently released Paradise Papers, which detail the tax affairs of some of the world’s wealthiest people, have revealed the offshore sites used by Apple to avoid paying billions in taxes.

BBC News reports that tech giant Apple began searching for a country to store their untaxed offshore cash in 2013 following a crackdown on their controversial tax practices in Ireland. Apple then moved approximately $252 billion in cash to the Channel Island of Jersey, but the company claims that this new structure has not lowered the amount of tax that they pay.

Apple still currently remains the largest taxpayer paying approximately $35 billion in corporation tax over the past three years. Apple claims that storing their funds offshore in the Channel Island of Jersey is perfectly legal and that it “did not reduce our tax payments in any country.” The company also said that no operations had been moved from Ireland.

Apple came under fire for their use of a tax loophole known as the “double Irish” in 2014, funneling all of their sales outside America through Irish subsidiaries that were essentially stateless, allowing them to pay very little tax on the revenue. Rather than paying the Irish corporation tax rate of 12.5 percent or the US rate of 35 percent, Apple managed to reduce their tax rate on profits outside the U.S. to the extent that their foreign tax payments usually amounted to less than five percent of their foreign profits.

Following an investigation by the European Commission, it was discovered that the tax rate for one of the Irish companies used by Apple for one year had been just 0.005 percent. Apple CEO Tim Cook was forced to defend the company’s tax practices in the U.S. Senate in 2o13. Senator Carl Levin told him at the time, “You shifted that golden goose to Ireland. You shifted it to three companies that do not pay taxes in Ireland. These are the crown jewels of Apple Inc. Folks, it’s not right.”

Cook responded in defense of the company saying, “We pay all the taxes we owe, every single dollar. We do not depend on tax gimmicks… We do not stash money on some Caribbean island.”  The leaked Paradise Papers appear to show that two of Apple’s Irish subsidiaries, Apple Operations International (AOI), where it’s believed that Apple has stashed approximately $252 billion in overseas cash, and Apple Sales International (ASI), were managed by Appleby, a global offshore law firm, from their office in Jersey from the start of 2015 until early 2016.

Jersey, a UK Crown dependency, is in charge of creating their own tax laws and currently has a zero percent corporate tax rate for foreign companies, making it a prime location for Apple to operate their subsidiaries from. Apple declined to comment on their subsidiaries moving their tax residency to Jersey but did comment on their business situation in Ireland saying, “When Ireland changed its tax laws in 2015, we complied by changing the residency of our Irish subsidiaries and we informed Ireland, the European Commission, and the United States.”

“The changes we made did not reduce our tax payments in any country. In fact, our payments to Ireland increased significantly and over the last three years we’ve paid $1.5bn in tax there.”