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How Apple Avoids Taxes
Liam Gill
January 03, 2024
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Story of the Day
Why does Apple pay nearly $0 in taxes, and how is it legal? Apple, the world's largest and most profitable public company, has paid minimal taxes on its products by strategically using subsidiaries in tax haven countries. In 2022, while Apple's revenue reached $394 billion and its market cap soared over $2 trillion, it has been adept at tax avoidance since 1990. Apple has set up shell companies in countries offering low to zero tax rates. Apple then gives those companies their patents, so those shell companies actually own all the IP behind Apple’s products. Apple then makes profits in the US, Canada, UK, etc., and then has its shell company in a tax-friendly jurisdiction charge royalties for using its IP. This allows them to legally funnel the money into companies that can benefit from a 0% income tax rate. This tactic has saved the tech giant billions in taxes. However, in 2017, the European Union imposed a $15 billion back tax charge on Apple. This was because Ireland was their main tax haven, and the EU rules that the laws Apple used in Ireland were not adequately enforced. In response, CEO Tim Cook relocated these subsidiaries to Jersey, a small island near Europe known for its 0% tax rate for large corporations, not to be confused with New Jersey. Now Apple is back to avoiding taxes!
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