How Many More Taxes Can Apple Dodge?

The tax troubles never end, and once again it’s Apple that is in the deep end. In France, Apple is about $6.5 million dollars deep in back-taxes.

France has a special tax that benefits the creative folks of the country by collecting a special tax on the sale of digital devices that use copyrighted content. Of course, Apple’s devices fall into that category, as tablets are known to be used heavily for media consumption. But, it doesn’t seem that Apple paid that tax.

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There is a group in France, called SACEM, that controls royalty payments to authors, composers, and the like.  According SACEM, Apple did not pay 5 million euros — about $6.5 million — in taxes that it owed on iPads sold in France in 2011. The group said Apple made the customers pay more to cover the tax, but that Apple didn’t then pay the tax itself.

To make sure that Apple pays what SACEM says it owes, the Grand Instance Court of Paris issued a judgement ordering Apple to pay the back-taxes. This could be one of the early instances of countries coming down hard on companies that are carefully and cleverly avoiding taxes.

In recent weeks, Apple executives were brought to speak in front of the Senate’s permanent investigations subcommittee. The discussion lead to Apple’s own tax practices, which have come into question because of suggestions that Apple has sheltered tens of billions of dollars from taxes.

Officials in the U.K. and European Union have also been putting pressure on the issue of tax avoidance. Shortly after the U.S. officials spoke with Apple executives, EU officials got together to discuss the same topic. Considering the areas financial crisis, it was striking to hear that the region may have lost as much as 1 trillion euros every year because of tax avoidance schemes.

All of the discussions could be pointing toward a very strict future after some adjustments to tax laws in the various regions. British Prime Minister David Cameron emphasized the need for cooperation between the nations to enforce effect tax laws, as many companies avoiding taxes use foreign subsidiaries to redirect cash into channels with little to no tax.

The situation with Apple and SACEM is just one more instance of governments cracking down on tax avoidance. In 2011, Google also was in a pinch in France. The company’s French offices were raided to see if the it truly hadn’t conducted tax-liable sales work. After the raid, Google was asked to pay 1.7 billion euros in back-taxes. Hewlett-Packard was called out for a scheme in the U.S. to avoid repatriation taxes.

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The more that these big companies are caught on their avoidance of taxes or negligence in paying, the more likely it seems that governments will try to push for quick changes to tax laws. This latest incident with SACEM may just be one more step in the direction of more stringent tax laws that ensure companies pay what they owe, and it could lead to many companies showing less astounding performance than before.

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