Apple's "elegant" tax avoidance to be exposed by Sydney expert

A Sydney university senior lecturer is set to reveal new research into Apple's controversial global tax structure, which is again under scrutiny this week.

The report on Apple's tax dealings is by Dr Antony Ting, University of Sydney Business School Senior Lecturer in Taxation Law. His research into Apple's global tax structure is set to be published this month by the British Tax Review.

Dr Ting said there are "misconceptions" Apple follows a similar tax structure as Microsoft or Google, instead describing Apple's structure as "simple". "It is consistent with Apple – elegant, well-designed, very simple, but still achieves a huge effect," he told CRN.

This follows a report this week by the Australian Financial Review claiming Apple Australia moved almost $9 billion offshore over the decade till 2013 – money which was not taxed in Australia.

The AFR report details a pattern of increasing mark-ups on product sold to Apple Australia over the years via Apple's international operation in Ireland. According to the article, the result is more money from Apple's Australian operation going to Ireland without being taxed.

In the US, Apple has previously stated it pays all the taxes it owes and supports corporate tax reform. In Australia, company officials told a parliamentary committee that the company pays taxes that are due.

Dr Ting claims the AFR's report is the first public estimate of how much of Apple Australia's profit has gone untaxed. "We know Apple is doing this, but this is the first time we know the exact number," Dr Ting told CRN.

"Right now, under the structure, the majority of profit that should that should be taxed in Australia is shifted to Ireland. And that profit is not subject to tax in Ireland or anywhere in the world," he said.

According to Dr Ting, a significant proportion of profit from every iPad or iPhone sold by Apple in Australia is not taxed.  "I pay $600 for an iPad in Australia. [Apple Australia] purchased the iPad from Ireland for $550. Out of that $550, $220 is not taxed anywhere in the world," he told CRN.

"In other words, about 40 percent of the payments we make for iPhones and iPads in Australia are not taxed anywhere in world. That violates the fundamental tax principle that profits should be taxed once, and only once, anywhere in the world."

Apple Australia's gross profits increased by 7.3 percent in the 12 months to September 2013, but its income tax paid fell by 9.2 percent.

Dr Ting said that many multinational companies had structures that reduced the amount of tax paid in some countries.

He argued that tax reporting for large multinationals should be changed to allow for more transparency. This should include a country-by-country reporting system, and different tax rules for intra-group transactions, he said.

Apple had not responded to CRN's request for comment at time of publication.