Apple's iTunes earnings mostly untaxed
Source: Australian Financial Review
More than two-thirds of the money Apple’s iTunes makes outside North America goes through the group’s Luxembourg holding company where it is not taxable, thanks to an intra-group fees agreement signed in 2008, tax documents obtained by The Australian Financial Review show.
While Apple pays less than 1 per cent tax in Ireland on sales of its iPhones, iPads and computers, most of its revenues from the sale of music and films outside the US flow to a Luxembourg company, iTunes Sàrl.
The 2011 accounts for iTunes Sàrl give the first inside view of how Apple accounts for its growing earnings from digital content. They are part of a massive leak of Luxembourg tax documents uncovered in an investigation led by the International Consortium of Investigative Journalists. Remarkably, the accounts show Luxembourg has been more effective in extracting tax from iTunes than Ireland has with much larger Apple sales.
Turnover for iTunes Sàrl exploded from €353 million ($508 million) in 2009 to €2.05 billion in 2013. Secret appendices to the 2011 accounts break down some of Apple’s costs. It shows that Apple takes a third of iTunes’ revenues as its gross profit margin. The 2011 figures showed that a flat 50 per cent of this gross profit was paid in intercompany charges.
Read more: http://www.afr.com/p/technology/apple_itunes_earnings_mostly_untaxed_LMCWxOl9k6cW8oNgCtdtOI
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