According to Senator Carl Levin, D-Mich, “Apple successfully sought the holy grail of tax avoidance. It has created offshore entities holding tens of billions of dollars while claiming to be tax resident nowhere.” One might think how Apple could not have residency nowhere, but this is where tax laws come into affect. In the United States, companies pay taxes based where they are incorporated, while in Ireland, companies pay taxes based on where they are managed and controlled. As a result, Apple was incorporated in Ireland, but was managed in the US in order to "neatly fall between the cracks of the two countries' jurisdictions"
Obviously everyone can blame Apple for avoiding taxes, but what if we consider taxes themselves. Apple is a big company that avoided taxes, but I'm sure that there are many other companies that deploy the same tactics to prevent giving up over 20% of their profits. As a result, there needs to be some universal unity in order to prevent such instances. Although it is difficult to do because certain governments are constructed for specific tax jurisdictions, the UN should at least make some mandatory guidelines. For example, if in Ireland companies paid taxes based on where they were incorporated rather than managed, Apple would be required to pay taxes to Ireland. A simple addition of a universal tax code would minimize tax avoidance.
I have to say, I give Apple props for being able to figure out this maneuver around taxes, and it only proves that taxes need to be mandated internationally. Additionally, even if Apple had needed to pay taxes in Ireland, the rates are significantly lower than in the US. So for now, companies are going to continue to find ways around tax laws and there's nothing that the government can do about it
How do you think the government should handle tax avoidance? And how can the government fix the problem of tax avoidance? Feel free to comment below.
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