May 22, 2013

How Apple Avoids Taxes By Exploiting Tax Residency Rules

How Apple avoids taxes by exploiting tax residency rules or Apple’s tax strategy.

Global taxes paid by ASI, an Apple subsidiary

Business Insider on Apple’s tax strategy 
Apple explained that, although AOI has been incorporated in Ireland since 1980, it has not declared a tax residency in Ireland or any other country and so has not paid any corporate income tax to any national government in the past 5 years. Apple has exploited a difference between Irish and U.S. tax residency rules. Ireland uses a management and control test to determine tax residency, while the United States determines tax residency based upon the entity’s place of formation. Apple explained that, although AOI is incorporated in Ireland, it is not tax resident in Ireland, because AOI is neither managed nor controlled in Ireland. Apple also maintained that, because AOI was not incorporated in the United States, AOI is not a U.S. tax resident under U.S. tax law either.

More details at the link above.

Apple is not alone with these tax strategies. Other large companies also follow similar tax strategies e.g. Google, Yahoo, Cisco, Merck, Dell and more.

And if you are wondering where does Apple’s offshore cash physically reside?  In New York

Tags: Apple tax strategy, how apple avoids taxes, apple’s offshore cash in manhattan, apple’s offshore cash in new york