APPLE is avoiding billions of dollars in taxes through a "complex web of offshore entities", according to a report by a US Senate sub-committee.
The Senate's permanent sub-committee on investigations said Apple had "sought the Holy Grail of tax avoidance", labelling the tech giant one of America’s biggest tax avoiders, The Times notes.
While there is no indication Apple has done anything illegal, the sub-committee said the company’s elaborate loopholes allowed it to save US tax on $44 billion in "otherwise taxable offshore income" over the past four years. Under the complex arrangement the company uses three subsidiaries.
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One source on the committee told The Guardian they were "iCompanies – i for imaginary, invisible".
Senator Carl Levin, the sub-committee’s chairman, alleged Apple "created offshore entities holding tens of billions of dollars, while claiming to be tax resident nowhere".
However Apple said its Ireland subsidiary Apple Operations International does not reduce its US tax liability, adding that it paid an "extraordinary" amount of tax in the US. The company’s CEO Tim Cook said the company "does not hold money on a Caribbean island, and it does not have a bank account in the Cayman Islands".
The allegations come amid increasing political pressure over tax avoidance. Both Google and Amazon have attracted attention in Britain over their tax arrangements. As the BBC’s business editor Robert Peston notes, the allegations are "part of a broad trend of multinationals paying a much smaller proportion of public-sector costs in all the world's developed economies".
He went on: "In the US, for example, corporate tax generated 32.1 per cent of all federal taxes in 1952. Today that proportion has fallen to a puny 8.9 per cent."
Corporate tax avoidance subject will be on the agenda at the G8 economic summit next month, chaired by George Osborne and David Cameron, while Labour leader Ed Miliband has also vowed to tackle it.
