Tax dodging deals

APPLE: SHIFTED TENS OF BILLIONS TO CHANNEL ISLANDS

Nike uses loophole to reduce its European tax rate to 2% instead of the ususal 25%.

New revelations on Monday from the “Paradise Papers” shed light on Apple’s tax avoidance strategy which shifted profits from one fiscal haven to another as well as loopholes employed by Nike and Formula One champion Lewis Hamilton.

They are the latest disclosures from a trove of documents released by the US-based International Consortium of Investigative Journalists (ICIJ) concerning secretive offshore deals.

According to documents cited by the New York Times and BBC, the offshore legal services firm Appleby helped the iPhone maker shift tens of billions of dollars from Ireland to the Channel Islands when it appeared to face a tougher stand on taxes by Dublin. Apple transferred funds to the island of Jersey, which typically does not tax corporate income and is largely exempt from European Union tax regulations.

Apple did not immediately respond to a query on the report, but told the New York Times it follows the law in each country where it operates.

The company is now facing an EU demand for about $14.5 billion (R203 billion) in taxes based on a ruling that its tax structure in Ireland amounted to illegal state aid.

The BBC and Guardian newspaper reported Hamilton avoided paying taxes on his private jet using an elaborate scheme now under investigation by British tax authorities. The leaked documents showed the driver received a £3.3 million (R61 million) tax refund in 2013 after his luxury plane was imported into the Isle of Man – a low-tax British Crown Dependency.

Representatives for Hamilton could not be reached for comment.

A separate report in France’s Le Monde said Nike used a loophole in Dutch fiscal law to reduce its tax rate in Europe to 2% compared with a 25% average for European companies. The tax savings came from Nike’s use of an offshore subsidiary which charged royalties to the company’s European subsidiaries, the report said.

Separately, the documents showed the Russian connection of US Commerce Secretary Wilbur Ross through a web of offshore investments. They revealed Ross’s 31% stake in Navigator Holdings partnership with Russian energy giant Sibur, which is partially owned by President Vladimir Putin’s son-in-law Kirill Shamalov and Gennady Timchenko, Putin’s business partner who is subject to US sanctions.

The Cabinet member’s ties to Russian entities raises questions about whether it undermines US sanctions on Moscow. –