Documents discovered by the Australian Financial Review reveal that Apple has used the “iTax” scheme to move an estimated $8.9 billion in untaxed profits from Australia to Ireland over the past ten years. The scheme, dubbed “iTax” by Sydney University’s Dr. Ting, was simplicity itself, and allowed Apple to pay only $200 million in taxes on the aforementioned profits.
The tax strategy was likely orchestrated by the retiring Apple CFO Peter Oppenheimer, and it is as simple as it can be, as Dr. Tin points out: Apple has used its Irish subsidiaries, Apple Sales International and Apple Operations International, which, under Irish law, pay no tax in Ireland, because they are managed in California. However, these companies pay no taxes in the US either, because they are registered in Ireland.
Apple has routed its sales through Apple Sales International, a company that extracts the profits as payments for intellectual property and intangibles. This allowed Apple to move roughly $8.9 billion in profits from Australia to Ireland.
Since Apple has been in the hot seat over its tax practices, Ireland has closed its tax loopholes but still allows the company to choose where its tax residence is, the Financial Review points out.
Apple emphasized that it is one of the largest taxpayers in the US. In 2013 it provided for $US12 billion in US federal and state taxes, and $US1.1 billion in foreign tax provisions.