Paradise Papers: Apple's secret tax bolthole revealed - BBC News

Paradise Papers: Apple's secret tax bolthole revealed

By Paradise Papers reporting team

BBC Panorama

Media captionParadise Papers: Apple’s secret tax bolthole revealed

The world's most profitable firm has a secretive new structure that would enable it to continue avoiding billions in taxes, the Paradise Papers show.

They reveal how Apple sidestepped a 2013 crackdown on its controversial Irish tax practices by actively shopping around for a tax haven.

It then moved the firm holding most of its untaxed offshore cash, now $252bn, to the Channel Island of Jersey.

Apple said the new structure had not lowered its taxes.

It said it remained the world's largest taxpayer, paying about $35bn (£26bn) in corporation tax over the past three years, that it had followed the law and its changes "did not reduce our tax payments in any country".

In a further statement the company stressed that no operations or investments had been moved from Ireland.

The Paradise Papers is the name for a huge leak of financial documents that is throwing light on the world of offshore finance.

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Up until 2014, the tech company had been exploiting a loophole in tax laws in the US and the Republic of Ireland known as the "double Irish".

This allowed Apple to funnel all its sales outside of the Americas - currently about 55% of its revenue - through Irish subsidiaries that were effectively stateless for taxation purposes, and so incurred hardly any tax.

Instead of paying Irish corporation tax of 12.5%, or the US rate of 35%, Apple's avoidance structure helped it reduce its tax rate on profits outside of the US to the extent that its foreign tax payments rarely amounted to more than 5% of its foreign profits, and in some years dipped below 2%.

The European Commission calculated the rate of tax for one of Apple's Irish companies for one year had been just 0.005%.

Media captionApple CEO Tim Cook in 2013: "We pay all the taxes we owe. Every single dollar"

Apple came under pressure in 2013 in the US Senate, when CEO Tim Cook was forced to defend its tax system.

Angry that the US was missing out on a huge amount of tax, then-Senator Carl Levin told him: "You shifted that golden goose to Ireland. You shifted it to three companies that do not pay taxes in Ireland. These are the crown jewels of Apple Inc. Folks, it's not right."

Mr Cook responded defiantly: "We pay all the taxes we owe, every single dollar. We do not depend on tax gimmicks... We do not stash money on some Caribbean island."

Apple's questionnaire

After the EU announced in 2013 that it was investigating Apple's Irish arrangement, the Irish government decided that firms incorporated there could no longer be stateless for tax purposes.

Media captionPanorama's Richard Bilton tries to speak to Appleby about Apple in Jersey

In order to keep its tax rates low, Apple needed to find an offshore financial centre that would serve as the tax residency for its Irish subsidiaries.

In March 2014, Apple's legal advisers sent a questionnaire to Appleby, a leading offshore finance law firm and source of much of the Paradise Papers leak.

It asked what benefits different offshore jurisdictions - the British Virgin Islands, Bermuda, the Cayman Islands, Mauritius, the Isle of Man, Jersey and Guernsey - could offer Apple.

The document asked key questions such as was it possible to "obtain an official assurance of tax exemption" and could it be confirmed that an Irish company might "conduct management activities… without being subject to taxation in your jurisdiction".

They also asked whether a change of government was likely, what information would be visible to the public and how easy it would be to exit the jurisdiction.

Source document: Apple questionnaire (extract)

Leaked emails also make it clear that Apple wanted to keep the move secret.

One email sent between senior partners at Appleby says: "For those of you who are not aware, Apple [officials] are extremely sensitive concerning publicity. They also expect the work that is being done for them only to be discussed amongst personnel who need to know."

Apple chose Jersey, a UK Crown dependency that makes its own tax laws and which has a 0% corporate tax rate for foreign companies.

Graphic: What could Apple buy with its $252bn offshore cash? It amounts to 219,321,148 iPhone X's, 2,672 Lockheed F-35 fighter aircraft, 1,272 Neymars and 427 'Eclipses' - the private yacht of Roman Abramovich

Paradise Papers documents show Apple's two key Irish subsidiaries, Apple Operations International (AOI), believed to hold most of Apple's massive $252bn overseas cash hoard, and Apple Sales International (ASI), were managed from Appleby's office in Jersey from the start of 2015 until early 2016.

This would have enabled Apple to continue avoiding billions in tax around the world.

Paradise Papers: All you need to know

Apple's 2017 accounts showed they made $44.7bn outside the US and paid just $1.65bn in taxes to foreign

The EC says Apple must repay Ireland taxes for the period within its remit of investigation, 2003-2013, a total of €13bn (£11.6bn) plus interest of €1bn.

Ireland and Apple launch an appeal.

Apple's Tim Cook calls the EC ruling "total political crap", with "no reason for it in fact or in law". Ireland says the EU is encroaching on sovereign taxation. It fears multinationals will go elsewhere.

Ireland agrees to collect the €13bn, to be held in a managed escrow account pending the appeal verdict.

In October 2017, the EU says it will take Ireland to court as it has not yet collected the money. Ireland says it is complicated and it needs time.

Tim Cook's claims examined

Massive GDP spike

When the "double-Irish" loophole was shut down, Ireland also created new tax regulations that companies like Apple could take advantage of.

One of the companies that Apple moved to Jersey, ASI, had rights to some of Apple Inc's hugely valuable intellectual property.

Graphic: Comparison of Apple's offshore cash reserves with foreign currency reserves held by leading nations. China: $3.1 trillion, Japan $1.2 trillion, Switzerland $795bn, Saudi Arabia $477bn. Taiwan $447bn, Russia $425.5bn, Hong Kong $419.2bn. South Korea $384bn, Brazil $365bn, Singapore $272bn, UK $154bn, US$124bn

If ASI sold the intellectual property back to an Irish company, the Irish company would be able to offset the enormous cost against any future profits. And since the IP holder, ASI, was registered in Jersey, the profits of the sale would not be taxed.

It appears Apple has done just that. There was an extraordinary 26% spike in Ireland's GDP in 2015 which media reports put down to intellectual property assets moving into Ireland. Intangible assets rose a massive €250bn in Ireland that year.

Ireland's department of finance denied that the new regulations had been brought in to benefit multinationals.

It said Ireland was "not unique in allowing companies to claim capital allowances on intangible assets" and had followed "the international norm".

Media captionInvestigative journalist Richard Brooks on Apple’s questionnaire and the Isle of Man’s response to it

Apple declined to answer questions about its two subsidiaries moving their tax residency to Jersey.

It also declined to comment when asked whether one of those companies had helped create a huge tax write-off by selling intellectual property.

Apple said: "When Ireland changed its tax laws in 2015, we complied by changing the residency of our Irish subsidiaries and we informed Ireland, the European Commission and the United States.

"The changes we made did not reduce our tax payments in any country. In fact, our payments to Ireland increased significantly and over the last three years we've paid $1.5bn in tax there."

Paradise Papers explainer box

The papers are a huge batch of leaked documents mostly from offshore law firm Appleby, along with corporate registries in 19 tax jurisdictions, which reveal the financial dealings of politicians, celebrities, corporate giants and business leaders.

The 13.4 million records were passed to German newspaper Sueddeutsche Zeitung and then shared with the International Consortium of Investigative Journalists (ICIJ). Panorama has led research for the BBC as part of a global investigation involving nearly 100 other media organisations, including the Guardian, in 67 countries. The BBC does not know the identity of the source.

Paradise Papers: Full coverage; follow reaction on Twitter using #ParadisePapers; in the BBC News app, follow the tag "Paradise Papers"

George W Bush says Donald Trump 'doesn't know what it means to be President' - Independent

George W Bush says Donald Trump 'doesn't know what it means to be President'

Current leader also criticised by senior Bush, who calls him a ‘blowhard’

Molly Fleming

The Independent US

George W Bush has criticised Donald Trump, saying: “This guy doesn’t know what it means to be President.”

Mr Bush went on record along with his father, George HW Bush, to discuss his thoughts on Mr Trump as part of a new book about the pair.

“I don’t like him. I don’t know much about him, but I know he’s a blowhard. And I’m not too excited about him being a leader” the senior Bush told historian Mark Updegrove, for his new book The Last Republicans.

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This is not the first time that the younger Bush has criticised the US President. He reportedly described Donald Trump’s inauguration speech in March as “some weird s***”.

He also made comments last month expressing his disappointment at the current political climate, in remarks which many deemed to be an attack on Mr Trump.

Speaking to the George W Bush Institute, he said: “Bigotry seems emboldened. Our politics seems more vulnerable to conspiracy theories and outright fabrication.

“[The founders of the Munich conference] would be alarmed by an increasing turn away from universal values and toward old ties of blood and race and sectarianism.”

Neither the 41st or 43rd presidents voted for Mr Trump in the election. George HW Bush said he voted for Democratic nominee Hillary Clinton, while his son told Mr Updegrove he did not vote for anyone.

“I voted ‘None of the Above’ for president, and Republican down ballot in 2016,” he said.

He went on to say it was “a strange election year”, while his 93-year-old father said he was sceptical of the President’s political motivations, saying he believed he was partly driven by “a certain ego”.

Kim is purging, executing again: South Korean intelligence - Asia Times

Kim is purging, executing again: South Korean intelligence

Going back to work after hiatus?

By ASIA TIMES STAFF NOVEMBER 4, 2017 12:45 AM

After a seeming lull, North Korean leader Kim Jong-un has reportedly resumed his purges and execution of top officials “to make an example,” according to South Korean intelligence officials.

Korea JoongAng Daily says the officials told members of the National Assembly’s Intelligence Committee on Thursday that those punished included North Korean media officials and a military officer. The details were shared in a closed session with lawmakers who later briefed local reporters.

According to the briefing, several executives of the Rodong Sinmun, an official newspaper of the Workers’ Party, were ordered to undergo “revolutionary measures” for an editorial gaffe. They were reportedly punished for not printing the celebration of a missile launch on the front page of the newspaper.

The newspaper said that revolutionary measures are are euphemism in North Korea for disciplinary actions against senior officials. The punishment can include banishment to remote areas or factories to perform hard labor. They can also be forced to undergo ideological re-education, including writing letters of self-criticism.

Representatives of South Korea’s National Intelligence Service (NIS) also told lawmakers that the political commissar of an antiaircraft artillery unit was executed for corruption. The intelligence agency, however, didn’t disclose the specific timing of the punishment or the identity of the disciplined official.

Prior to this, Kim’s most recent purge was the dismissal of General Kim Won-hong as minister of state security last January. Kim reportedly refrained from authorizing severe punishments for his senior officials for months, but “recently strengthened surveillance of top officials and resumed executions and punishments to set an example,” the NIS told legislators.

'We'll see!' How Trump answers tough questions - CNN News

'We'll see!' How Trump answers tough questions

Story by Ryan Struyk and Sam Petulla. , CNN

Updated 2205 GMT October 29, 2017

Washington (CNN)Just two weeks into Donald Trump's new presidency, he announced he was going to "look at" the unfounded claim that 3 million people voted illegally in the 2016 election.

When pressed on it the next month, he said "we'll see," implying there could be even more illegal votes.

Nine months later, we're still waiting for answers. And it hasn't been the only time.

The President has been looking into everything from the North Korea crisis to peace in the Middle East, from health care specifics to immigration policy, from infrastructure plans to disaster relief in Puerto Rico.

Trump has used this device on a position or action more than 100 times as President, according to a new CNN analysis of transcripts, speeches, tweets and statements compiled by Factba.se.

The answer is the same whether the subject is the fates of Cabinet officials, the future of trade pacts or pushes to pass major legislation -- he responds with a blanket, noncommittal "we'll see."

Scroll down for the full list and see all the times Trump has said he's "looking into" something or that "we'll see."

Obviously, Trump is not the first President to evade difficult topics. (All politicians do it.) But Trump has a unique way of dancing around taking clear positions and avoiding transparency.

For example, Trump announced in April that he was "looking at" designs for the border wall with Mexico. But then he was "working it out" in June, "seriously looking" in July, "looking" in September and "looking" some more in October.

It happens on major legislation, too. "We're looking at that, and we're going to announce something very soon," Trump told The New York Times about a sweeping infrastructure plan -- back in April. No plan has been unveiled.

Creating uncertainty and unpredictability has been a signature style of the Trump campaign and now the White House. Trump has remarked that he sees perceived unpredictability as an asset in negotiations.

On some major issues, he's wiggled a kind of middle ground to avoid a final decision. Trump said "we'll see" about renegotiating the Paris climate agreement weeks after his decision to leave. He's said "we'll see" about the Iran nuclear deal after announcing his intent to decertify it. And on NAFTA, the fate of which still hangs in the balance, Trump has said "we'll see" what happens for several months.

When Trump says he's "looking at" or "we'll see" about a government official, it's usually not a good sign. In April, he said "we'll see what happens" about former FBI Director Jim Comey, who was fired days later. In August, he said "we'll see what happens" with Steve Bannon, who was fired. In September, he was "looking into" Secretary Tom Price, who later resigned.

But it hasn't been the end of the road for everyone. In July, he said he was "looking at" the fate of Attorney General Jeff Sessions and "we'll see" about Special Counsel Bob Mueller. Both are still in their jobs.

Of course, this didn't start when Trump took the oath of office. Trump punted on everything from his relationship with Russia to gun violence during the campaign. And even before that, stretching back to when Trump was mulling a presidential run in 1999, the then-real estate mogul told NBC he was "looking at" a campaign for the White House "very seriously."

The words come from a President who largely was not held accountable to shifting or ambiguous positions during the campaign. So will Trump change his ways any time soon? We'll see.

Germany still has no government — here are the key reasons why - CNBC News

Germany still has no government — here are the key reasons why

German Chancellor Angela Merkel said she wants proper talks to begin with other political parties in order to form a coalition government

There are stark differences over immigration, climate change and euro zone reforms, however.

Merkel called Monday for proper talks between her conservative Christian Democratic Union (CDU) and Christian Social Union (CSU) alliance, the liberal Free Democratic Party (FDP) and the Green Party to begin within the next 10 days.

Holly Ellyatt | @HollyEllyatt

German Chancellor Angela Merkel said she wants proper talks to begin with other political parties in order to form a coalition government, but differences over immigration, climate change and euro zone reforms remain obstacles to forming a new alliance.

Merkel called Monday for proper talks between her conservative Christian Democratic Union (CDU) and Christian Social Union (CSU) alliance, the liberal Free Democratic Party (FDP) and the Green Party to begin within the next 10 days.

In a video message on Facebook, Merkel said that she wanted exploratory talks to end on November 16 and for proper negotiations to begin that could conclude with a coalition being formed, Reuters reported. Merkel alluded to the warring parties and their different priorities in the video:

"For me it is clear that on the subject of finances the question is how we can use the room for maneuver (in the budget) so that everybody can have their priorities implemented while at the same time ensure that we have a balanced budget," Merkel said.

Germany held a federal election in September but Merkel's CDU-CSU alliance did not win enough votes to govern alone, forcing it to form some sort of coalition government.

The specter of the far-right also loomed over the election with the Alternative for Germany (AfD) party gaining enough votes to enter the German parliament, the Bundestag, for the first time.

Exploratory talks have taken place between Merkel's Conservative bloc, the Greens and the FDP (to try to form a "Jamaica coalition," so named because of the colors of the political parties involved) but the latter two parties have blamed each other over a lack of progress.

The obstacles

The Greens and pro-business FDP parties are not natural bedfellows with marked differences over climate policy, immigration and reforms for the euro zone.

While the Greens want to see 100 percent renewables in the energy sector by 2030, an open immigration system and more European integration, by contrast the FDP wants tighter controls on immigration, rejects plans for more financial integration in the euro zone and has said that modern coal plants are "indispensable for the foreseeable future."

There are also differences between the parties over defense spending (the Greens wanting less, the FDP more) and taxation (the Greens wanting tax rises for higher earners, the FDP would like to see tax cuts). The one thing the parties seem to agree on is public spending, with all parties agreeing that infrastructure spending needs to be increased.

The Green Party Chairperson Simone Peter has been critical of the FDP's position on climate policy and migration, commenting that the FDP were "playing into the hands of climate change deniers" and that their tough stance on immigration amounted to "populist platitudes."

Meanwhile the leader of the FDP, Christian Lindner, has hit back, saying that there is no use rushing talks just to form a coalition government "that is not stable and constantly argues."

Speaking to the Berliner Morgenpost newspaper Sunday, Lindner said that a coalition would not come to fruition just "because everyone is exhausted and has to find a way to come together." He gave the chances of a Jamaica coalition (so named because of the party colors involved) at 50-50 and said his party was not afraid of a new election should talks fall apart.

Fractious relations between Merkel's potential coalition partners puts the chancellor in a difficult situation but there is little choice given that her main opposition party, the Social Democratic Party, has chosen to not enter a coalition.

In her video message Monday, Merkel addressed the main issues of contention, saying that Germany had signed up to "challenging goals for 2020" with regards to climate change that "are not so simple to meet." She added that "especially important for us is the issue of immigration and integration," adding that "these will be difficult issues."

Russian Lawyer Says Trump Jr. Offered Her a Deal: Hillary Dirt for a Change to U.S. Law - Fortune

Russian Lawyer Says Trump Jr. Offered Her a Deal: Hillary Dirt for a Change to U.S. Law

By Geoffrey Smith November 6, 2017

The Russian lawyer who met Donald Trump Jr. during last year’s election campaign says he offered her a clear quid pro quo at the meeting: dirt on Hillary Clinton in exchange for changes to a U.S. law.

In an interview with Bloomberg, Natalia Veselnitskaya gave details for the first time of what passed between her and Trump Jr. in a meeting at Trump Tower in Manhattan on June 9th last year. The meeting was also attended by Paul Manafort (at the time, Donald Trump senior’s campaign manager) and Jared Kushner, the future president’s son-in-law and senior advisor.

Veselnitskaya had engineered the meeting by offering proof that Democratic donors had evaded U.S. taxes. In return, by her own account, she was trying to lobby for changes to the so-called 2012 Magnitsky Law that imposed travel bans and sanctions on Russian officials accused of conspiring in the murder of an accountant, Sergey Magnitsky, who had accused officials of corruption.

“Looking ahead, if we come to power, we can return to this issue and think what to do about it,’’ Trump Jr. said of the 2012 law, Bloomberg cited Veselnitskaya as saying. “I understand our side may have messed up, but it’ll take a long time to get to the bottom of it.”

She also said that Trump Jr. had asked her for written proof of her claim that Ziff Brothers Investments had evaded U.S. taxes while donating heavily to Clinton and other Democratic candidates. As she didn’t have that, the meeting quickly ran into the sand, she said.

Bloomberg said Trump Jr.’s lawyer Alan Futerfas declined to comment.

Veselnitskaya also told Bloomberg that she would be happy to travel to the U.S. to be interviewed by the Senate Judiciary Committee, but only if her answers are made public—a condition the Senate hasn’t agreed to yet. She also said she would be willing to testify to Special Counsel Robert Mueller, if asked.

Her comments add to a growing body of evidence indicating that the Trump campaign was willing to change official U.S. policy to please Russia in return for anything that would help win the election. The Trump camp has routinely denied any allegations of collusion.

Mueller last week ordered the arrest of Manafort and two other former Trump campaign aides in connection with his investigation into alleged collusion between the campaign and Russia. Manafort was charged with multiple counts of money-laundering and failing to register as a foreign agent (mostly pertaining to his work before joining the Trump campaign) working on behalf of Ukraine’s then-President Viktor Yanukovych.

Yanukovych fled to Russia after he was deposed in February 2014.