A recently released report from an analyst has revealed that tech giant Apple transferred $11.2 billion into offshore accounts in the fourth quarter of 2012 to shield it from taxes. As a result, Apple has only paid 2% taxes on its overseas profits. The analyst with the Sunday Times says that Apple has shielded up to $94 billion from taxes and it is perfectly legal. Corporation tax on Apple's overseas operations amount to just 1.9% of profits, compared with a tax rate of up to 24% in the UK and 35% in the US.
Apple is said to have avoided more than £550 million in taxes in Britain in 2011. In its latest financial report, Apple showed a UK turnover at just over £1bn and profit at £81.3m, generating a tax bill of £14.4m. But according to the Sunday Times, a more realistic turnover for the UK operations would be £6.7 billion which would imply an estimated profit of £2.2 billion and, at the 2011 corporation tax rate of 26%, Apple’s tax bill would amount to £570m.
As you would expect, many large corporations avoid hefty taxes by funneling their funds to offshore accounts in tax haven countries like the British Virgin Islands, Switzerland, Panama etc. Britain’s Prime Minister, David Cameron last week told tax-evading companies to "wake up and smell the coffee", comments which drew threats from Starbucks' UK managing director of suspending millions of pounds of investment in Britain.
The furor with Starbucks arose last year with the coffee maker paying nothing in taxes despite making some £398 million in sales. This led to Starbucks pledging to pay corporate tax of up to £20 million to the UK government. Likewise, Facebook has also been accused of paying pittance in taxes after it paid only just over £238,000 last year despite estimated revenues of £175 million.
At the end of last month Prime Minister Cameron called for an investigation into claims of massive tax avoidance while Brussels moved to close European VAT loopholes enjoyed by Amazon, Skype and Netflix. The Prime Minister said HM Revenue & Customs should “look carefully” into cases where giant corporate companies legally escape paying taxes or pay very little despite making billions of pounds in revenue in their UK business.