Recently, many companies from USA have been under the scanner by the US Congress with regards to the taxes they pay. One of the big names in this investigation is Apple. The investigation being carried out by the US Congress is with regards to the taxed paid by various US based companies.
Apple, with its $40 billion of so cash pile is a big target for everyone. During the investigation, Tim Cook presented all the facts and has gone on record to state that Apple does nothing wrong. He is quite right on that front – Apple has done nothing wrong and has simply followed the law of the land.
But then where is the disparity? Investigations have found that a lot of money that Apple reports, is from overseas accounts and sale. This, this money is taxed by the local government. Additionally, by opening offices in tax friendly nations like Ireland – that have a low taxation rate – companies can pay less tax.
While this is an internationally accepted practice for many decades, it creates a certain amount of unease given the current economic situation, where countries are facing lower incomes on the one hand and also have companies that are earning more profits.
The unease increases when we find out that a company like Apple has an office registered in Ireland to do business, but the office has no employees!!!
On reading such reports, any common person will be under the impression that companies are dodging their duty by not paying their taxes, even though the whole exercise is legal.
The funny thing is, many of these laws have been enacted by the Congress, in consultation with many business leaders, economists and the like. With domestic sentiment somewhat against companies using tax havens to park money, politicians are playing politics by stating that Apple is a tax dodger, echoing their voting base.
Instead, they can work with the industry to reduce the amount of tax paid by corporations, enabling them to bring some of their monies into the country.