Despite recent record earnings and net profits in the billions, Apple (NASDAQ:AAPL) hasn’t been paying its fair share of taxes, according to a report Tuesday in Britain’s Daily Mail.
The report alleges that although Apple earned an estimated 6 billion pounds (about $9.5 billion) in the United Kingdom in the last financial year, the iPad maker only paid 10 million pounds (around $16 million) in taxes, much lower than what would be expected in the country. Documents from the company’s retail divisions indicate that Apple also paid less than the standard amount of taxes in 2010, the report said. According to the documents, Apple paid 3.79 million pounds ($6 million) on retail sales of more than 500 million pounds (close to $800 million).
Apple maintains a large operation in Cork, Ireland, which is known for its extremely low corporation tax. Irish corporation taxes are 12.5 percent, compared with 24 percent in the U.K. The company also has a unit in a notorious tax shelter, the British Virgin Islands in the Caribbean. Experts believe Apple’s total sales in the U.K. are much higher than the company admits because many are recorded in other locations. These experts reportedly think Apple’s revenues from Britain actually account for about 10 percent of the company’s worldwide total revenue of nearly $100 billion.
Apple is also avoiding paying taxes on its home turf in business-friendly Nevada, the report claims. The Daily Mail writes that although Apple is required by law to pay corporation taxes in the U.S. at a rate of 35 percent, the company paid at a rate of just 25.3 percent, saying it had “undistributed foreign earnings” that it plans to hold “indefinitely.”
The Daily Mail report emerged just as Apple set a company record Tuesday, when its market capitalization passed the $600 billion mark. The Daily Mail report also claims that Google (NASDAQ:GOOG) and Amazon (NASDAQ:AMZN) have dodged taxes in Britain, although Google denies the allegations. Regardless, investors should keep an eye on whether some new accounts payable pop up around this.