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Apple tax issue likely to be raised after profit revelation

16/02/15

Apple's tax affairs in Ireland may come under greater scrutiny after it reported the highest quarterly profit in corporate history.

The latest results reported by tech company Apple have caused a sensation, with the multinational revealing the highest quarterly profit figure in corporate history.

However, those working for tax firms in Ireland may look on the matter somewhat differently, not least as the company is notorious for manipulating the system to ensure that its profits stay high without much tax being paid in the countries where it is earning huge sums in revenue.

Apple's revenues for the third quarter of 2014 were $74.6 billion (€64.6 billion), from which it drew $18 billion in pre-tax profits. The success of its new iPhone6 was the main cause of its surge in income, with 74.4 million sold in the period.

Although the highest increase in sales was in China - up 70 per cent - the company still enjoyed a jump of 23 per cent in the US and 20 per cent in Europe.

That should, in theory, translate into more tax revenues for governments. However, the transfer of revenues through three Ireland-based subsidiaries to take advantage of the 'double Irish' loophole has ensured this will not be the case.

With the government planning to close this loophole under international pressure, Apple will need to do something different. The question is what. Will it decide that, as it is now turning in levels of profits no company in history has emulated, it should have no qualms about paying its fair share? The alternative is that it tries to find another way to beat the system, in Ireland or elsewhere.

Tax company workers in Ireland may be braced for the latter course of action, not least because even the goodwill shown to Apple by those who cannot wait to get their hands on each new device it produces may be tested by the size of the tax bill increases if the company plays ball. After all, a huge year-on-year jump will enable critics to seize on the figure as evidence of just how duplicitous and underhand the company has been.

Equally, however, Ireland's tax authorities may come under increased scrutiny if, once the double Irish loophole is abolished, Apple is still able to find a way to play the system and keep its tax bills low.

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