Tax Avoidance

In: Business and Management

Submitted By alecpz
Words 741
Pages 3
APPLE TAX AVOIDANCE
SCHEME
DOUBLE NON-TAXATION
April 2015

1

Apple International Structure

Source: New York Times

2

Taxation Principles
RESIDENCE:
• Incorporation
• Place of Management
-> Case of Ireland
SOURCE:
• Source jurisdiction is generally expected to have priority, but the concept of source is generally poorly developed in domestic tax legislation
• Notion of permanent establishment, head office and transfer pricing rules

3

Double Irish Arrangement
• The Double Irish Arrangement is a tax avoidance

strategy that some multinational corporations use to shift income from a higher-tax country to a lower-tax country.

• It is called Double Irish because it requires two Irish

companies to complete the structure. One of these companies is tax resident in a tax haven

4

Apple Operations International (AOI)
• AOI, the company's primary offshore holding company,

made up 30% of Apple's total world profits.

• Residence: Irish and U.S. tax residency rules:
• Ireland uses a management and control test to determine tax residency. • United States determines tax residency based upon the entity’s place of formation.
• AOI is incorporated in Ireland, it is not tax resident in

Ireland, because AOI is neither managed nor controlled in
Ireland. Because AOI was not incorporated in the United
States, AOI is not a U.S. tax resident under U.S. tax law either. 5

Apple Sales International (ASI) (1)
• The second biggest Apple subsidiary
• ASI buys Apple's finished products from contracted

manufacturers in China and resells them to other Apple affiliates • Upon arrival, the products were resold by ASI to the Apple distribution affiliate that took ownership of the goods.

Source: Apple Consolidating Financial Statement

6

Apple Sales International (ASI) (2)
• A company incorporated…...

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