Tag: tax

Oracle forced to pay back taxes

Multinational tech giant Oracle has been charged $293 million for corporate tax evasion in South Korea.

The $293 million charge is made up of back taxes, as well as a punitive charge from the government tax agency.

Oracle was told of the tax debt in January last year, when the National Tax Service charged Oracle with evasion of corporate tax payments from 2008-2014.

The outfit was accused of funnelling revenues to Ireland to avoid paying taxes in South Korea. In an audit of the company’s books, the tax authority found that Oracle had channelled profits generated in South Korea to an Irish subsidiary.

It was found that those funds profited the company’s headquarters in the United States.

Because of this, the NTS figured out that Oracle should have paid taxes on profits generated in South Korea to the South Korean government.

 

Amazon wins tax case

Online bookseller and purveyor of talking radios, Amazon, has won a decade old case against the US taxman.

The Internal Revenue Service wanted Amazon to pay more than $1.5 billion over transactions involving a Luxembourg unit.

Judge Albert Lauber of the US Tax Court rejected a variety of IRS arguments, and found that on several occasions the agency abused its discretion, or acted arbitrarily or capriciously.

The case involved transactions in 2005 and 2006, and could boost its federal tax bill by $1.5 billion plus interest. It also said a loss could add “significant” tax liabilities in later years.

Amazon made just $2.37 billion of profit in 2016, four times what it made in the four prior years combined, on revenue of $136 billion.

In one of the more pot calling the kettle black moves of the US elections, Donald (Prince of Orange) Trump claimed that Amazon did not pay enough taxes and accusing it on Fox News of “getting away with murder tax-wise”.

The IRS case involved “transfer pricing,” which arises when different units of multinational companies transact with each other.

Amazon argued that the IRS overestimated the value of “intangible” assets, such as software and trademarks, it had transferred to a Luxembourg unit, Amazon Europe Holding Technologies SCS.

Amazon did this through a plan called “Project Goldcrest,” to have the “vast bulk” of income from its European businesses taxed in Luxembourg at a “very low rate”.

Amazon has said it may face more tax bills in Europe if authorities in Brussels conclude that prior rulings by Luxembourg tax officials amounted to improper “state aid” that gave it an unfair advantage over rivals.

Google and Facebook investigated by Israeli tax man

The Israeli Tax Authority has opened an inquiry into the local antics of tech giants Google and Facebook.

The taxmen have conducted meetings with clients of Google, asking detailed questions about the methods used by Google and Facebook to conduct local operations.

Questions put to clients centered around the degree of involvement that local representatives of Google and Facebook had in designing marketing campaigns, and setting budgets and targets for clients.

Basically the Israeli’s are unsure if the Israeli teams were acting independently, or if they were referring business matters to overseas headquarters and then merely implementing corporate decisions in the local market.

Should the investigation conclude with the determination that Google and Facebook Israel teams are independently responsible for activities in the local market, the tax authority may recommend that the companies pay a rather a large tax to the Israeli government for business conducted within the country.

Facebook and Google claim that they operate in Ireland, thereby avoiding paying direct or indirect taxes to the Israeli government.

Research shows that total online advertising expenditures topped $333 million in Israel in 2015, with online taking an ever-expanding segment of budgets from traditional advertising. Of that $333 million, over half was dedicated to spending on social media and search sites, two areas dominated by Facebook and Google.

In April 2016, the Israel Tax Authority unveiled a new set of guidelines regarding tax liability for foreign corporations operating in Israel. Under these rules, an international company would owe taxes if its services were produced in Israel. To prevent double taxation with countries that have international tax agreements with Israel, the foreign corporation must have a permanent establishment within Israel.

A permanent establishment was defined as a physical space used by the business to conduct operations, or a virtual space – including a website – where agents are empowered to conduct local business and enter into contracts on behalf of the corporation.

Gates calls for Robot tax

Software king and sworn enemy of the mosquito, Sir William Gates III, has been suggesting that companies pay a tax on the robots they use.

Gate’s reasoning is that if a robot takes human job, it should continue to pay that human’s taxes.

In a recent interview with Quartz, Bill Gates said the move would temporarily slow the spread of automation and to fund other types of employment.

Money gained from taxing robots could then be used to finance jobs taking care of elderly people or working with kids in schools — jobs which humans are particularly well suited for:

Gates said that governments must oversee such programs rather than relying on businesses, to redirect the jobs to help people with lower incomes.

EU lawmakers considered a proposal to tax robot owners to pay for training for workers who lose their jobs. In the end though the legislators rejected it. Gate said that governments should be willing to raise the tax level and even slow down the speed of automation.

He said that technology and business cases for replacing humans in a wide range of jobs are arriving simultaneously, and it’s important to be able to manage that displacement.

“You cross the threshold of job replacement of certain activities all sort of at once,” Gates said. Warehouse work is already doomed.

Apple goes for the worse legal defence ever

apple queueFruity tax-dodging cargo-cult Apple has come up with quite possibly the worst court defence we have ever seen.

When faced with charges of colluding with the Irish government to avoid paying Tax, Apple all but admitted it, however it sad that it should not be found guilty because it was just a “convenient target” which had been singled out because it was successful.

In other words, it is OK to commit a crime and do it in an obvious way.

If this applies it means that if you murder your wife for her money and make it so obvious that you are the crook, you can get away with it because it was easy for the cops to arrest you. Millions of butlers who were arrested for murder under the Agatha Christie act could appeal their sentence.

There is 14 billion euro in the kitty if Apple can pull off its tax dodge in the courts. Apple is claiming that EU regulators ignored its tax expert and corporate law and deliberately picked a method to maximize the penalty.

European Competition Commissioner Margrethe Vestager, a former Danish economy minister, said Apple’s Irish tax bill implied a tax rate of 0.005 percent in 2014 which really was taking the Nintendo even by the standards of corporate tax dodges.

Apple’s General Counsel Bruce Sewell claimed that the iPhone and iPad maker was singled out because of its success. Well yes, a criminal who dodges huge amounts of tax will be singled out by the coppers rather than those who don’t do anything – that is mostly how the legal system works.

“Apple is not an outlier in any sense that matters to the law. Apple is a convenient target because it generates lots of headlines. It allows the commissioner to become Dane of the year for 2016,” he said, referring to the title accorded by Danish newspaper Berlingske last month.

Apple claims that the Commission was not diligent in its investigation because it disregarded tax experts brought in by Irish authorities. These were authorities who told

Apple that what it was doing was perfectly legal and therefore their opinion carries more legal weight than common sense. After all if someone tells you that you only have to pay 0.005 percent tax when you know you have to pay 16 per cent they obviously have more legal weight than the people who have asked you to pay the full wack. But

Common sense is clearly out to lunch at Apple – missing presumed fed.

The Commission’s tax demand angered the U.S. government, which accused the EU of grabbing revenue intended for US coffers. Of course, it has not the courage to take on Apple in the courts itself, but it has the right to claim the money that it is not getting for itself.

Sewell added it was impossible for Apple to comply with the EU decision because it would mean Ireland violating its own past tax laws setting different rules for residents and non-resident companies.

The Irish government is also appealing against the European Commission’s tax demand. It believes it must protect a tax regime that has attracted many multinational employers to the country. It works on the basis that being a soft state does provide jobs, even if it does not support the training of those workers and the infrastructure.
Apple plans to tell the court that the Commission erred when it ruled that the head office of Irish-registered units Apple Sales International (ASI) and Apple Operations

Europe were only front companies which existed to move money around to avoid tax.

Sewell said the fact that an entity was a holding company with no employees on its books did not mean it was inactive and it could be actively managed by employees of its parent company.

“So when Tim Cook, who is the CEO of our company, makes decisions that impact ASI, the Commission says we don’t care because he is not an ASI employee, he is an Apple Inc employee. But to say that somehow Tim Cook can’t make decisions for ASI is a complete mis-statement of corporate law, it’s a misunderstanding of how corporations operate,” he said.

Outrageous apple tax case unique claims the OECD

apple-hanged-on-christmas-treeA multi-billion euro back tax bill handed to Apple by the European Commission should not be seen as a precedent for future tax cases as it was based on state aid rather than tax law, according to a top e OECD official.

Pascal Saint-Amans, who is leading the Organisation for Economic Co-operation and Development’s flagship Base Erosion and Profit Shifting (BEPS) project, said that under the new OECD rules, most of the tax from US technology multinationals like Apple should be paid in the United States, not Ireland.

But the European Union antitrust regulators last month ordered Apple to pay up to $14.6 billion in back taxes to the Irish government after ruling that a special scheme to route profits through Ireland constituted illegal state aid.

Saint-Amans said that in transfer pricing terms, the bulk of the profit clearly belongs to the United States” rather than Ireland or any other European country, told journalists in Dublin.

Transfer pricing, the setting of prices for the transfer of goods or services from one subsidiary to another which critics say is used to reduce tax liabilities in relatively high-tax countries, is a key target of the BEPS process.

“My understanding is that the EU decision is based on a certain form of legalistic state-aid reasoning which is specific to the state-aid investigation. It is not a transfer pricing case,” he said.

“What is extremely important is that these rules, these standards, be implemented consistently by everybody and that the state-aid cases do not undermine the standard, in particular, on transfer pricing rules,” he said.

Saint-Amans said Apple’s tax planning in the period studied by the EU was “outrageous”, would not be possible under the BEPS rules.

Google gets tax bill in Indonesia

c5-en_IN_all-destinations-IndonesiaIndonesia has said that it will chase up Google for five years of back taxes with the search giant facing a $400 million for 2015 alone.

Muhammad Haniv, head of the tax office’s special cases branch and his team raided Google’s local office in Indonesia on Monday. It thinks Google Indonesia paid less than 0.1 percent of the total income and value-added taxes it owed last year.

Google Indonesia said that it continues to cooperate with local authorities and has paid all applicable taxes. However it seems that Indonesia is  ramping up tax collection to narrow its budget deficit and fund an ambitious infrastructure program. Other governments around the world are seeking to clamp down on rampant corporate tax avoidance.

Haniv added that the tax office planned to pursue other internet firms for back taxes.

If found guilty, Google may have to pay fines of up to four times the amount it owed, bringing the maximum tax bill to $418 million for 2015, Haniv said. He declined to provide an estimate for the five-year period.

Most of its revenue generated in the country is booked at Google’s Asia Pacific headquarters in Singapore. Google Asia Pacific declined to be audited in June, prompting the tax office to escalate the case into a criminal one, he said.

US taxman cometh for Apple

taxmanWhile Apple claims that the EU  is all part of an “anti-American plot” it would appear that the US taxman is about to demand a slice of the action.

The US Treasury said it was tightening restrictions on companies’ use of foreign tax credits to reduce what they owe in US taxes.

Treasury Assistant Secretary for Tax Policy Mark Mazur said the government was closing another tax loophole that contributes to the erosion of the US tax base.

Analysts have speculated whether Apple could cut its US tax bill by claiming foreign tax credits for its extra tax bill in Ireland.

Under normal circumstances, US companies can reduce the taxes they owe the US government by the value of the tax credits they claim for taxes paid abroad on foreign profits. No US tax is due on those profits until they are brought into the United States, or repatriated.

But the new rule will prevent companies faced with back tax bills from “splitting,” a strategy that allows companies to bring foreign tax credits into the United States without repatriating the income from which they were derived.

Apple is not saying anything of course. The Treasury had no comment on whether its notice would have an impact on Apple directly, but a spokesperson said the notice applies to all companies required by a foreign government to pay additional taxes, including those hit by state-aid cases.

 

Dutch tell Apple to stop mucking about

Kenneth-WilliamDutch Finance Minister Jeroen Dijsselbloem told Apple to “get ready” to pay up, as he and counterparts from other EU nations lined up behind a finding that the technology giant owes billions of euros due to more than a decade of improperly low taxation.

By the time Apple gets around to paying, the bill could be 19 billion euro ($21 billion) thanks to interest. On the last day of an EU finance ministers’ meeting focused on ways to harmonise tax rules for international companies, Dijsselbloem told reporters that these “have an obligation to pay taxes in a fair way”.

International tax loopholes are a thing of the past, he said. Apple will have to pay back taxes both in the United States and Europe and needs to get ready to do that.

Apparently it is not going to be much different in the UK either. Philip Hammond, his British counterpart, said the EU was keen “to make sure that international corporations pay the right tax at the right place. “That’s the fair way to do it, and we are going to make sure it happens.”

Austrian Finance Minister Hans Joerg Schelling said Austrian, Italian and France tax authorities are following the case closely with the option of posting claims, and a senior OECD official attending the meeting suggested they could have right to do so.

Angel Gurria, who heads the 35-nation Organization for Economic Cooperation and Development, cited the EU Commission ruling on Apple and invited other nations that might have a claim “to come forward”.

EU says Apple ruling not “anti-American”

apple queueThe EU is fighting Apple’s spin that somehow demanding it pay the same tax as everyone else is “anti-American”.

Apple is telling its Tame Apple Press, and its “lobbied” US politicians, that the EU is targeting it as part of an anti-American campaign inspired by those nasty communist Europeans.

But European Commission President Jean-Claude Juncker said on Sunday that the EU ruling was clearly based on facts and existing rules and was not a decision aimed at the United States,

France and Germany have come out to back Brussels on the decision.

Juncker said EU Commission investigations on taxation had mainly targeted European companies.

The decision comes amidst a coordinated global initiative to crack down on tax evasion by multinational companies, spearheaded by the Paris-based Organization for Economic Cooperation and Development (OECD).

The ruling against Apple has pushed the issue into the limelight and raised the risk of significant push-back from the United States, analysts say, where some lawmakers are saying the result represents a European encroachment on the US potential tax base.

Pascal Saint-Amans, director of the OECD Center for Tax Policy and Administration, dubbed Apple’s tax planning “outrageous” but, like Juncker, said the decision was based on enforcing current regulations.

Saint-Amans said he believed it would be unlikely to serve as a precedent for enforcement on future income earned by multinationals.