Are we entering a new era of transparency in the financial dealings of tech companies? If the global powers that be have their way, we certainly will.
You would be forgiven for getting a little excited at Apple this week filing its consolidated accounts for Apple Operations International, an entity that covers most – though not all – of the company's subsidiaries outside the US. It includes eight operations in Ireland, covering Apple's digital services, sales and distribution, and the figures looked impressive. The company paid $6.66 billion in tax, with $1.8 billion of that in corporate tax.
Before we get carried away with visions of shoring up the health service or fixing our broken social housing system, not all of that money was paid directly to the Irish exchequer. Some, yes, but although the company is tax resident here, some of that cash went to other countries in which it operates. Overall, Apple Operations International paid an effective tax rate of 14 per cent on its income, in line with what you might expect it to pay.
Schrödinger’s settlement
It's not surprising that Apple is becoming a little more transparent on its tax dealings. Having been burned by what the European Commission called "state aid" from the Republic over a 10-year period, Apple has forked out €14 billion in back taxes and fines, which will rest in an escrow account until a lengthy appeals process has concluded. It's a little like Schrödinger's tax settlement – it is both there and not there, in that the Irish authorities can't touch the cash until the last legal process has ended.
But while Apple may be commended for upping the transparency a little, the company had been given a little nudge by a change in the laws governing which companies needed to file accounts with the Companies Registration Office.
Can we expect the same from other big tech firms in the future? With a global push towards making tax systems more equitable, it may be that they have little choice.
