Question

Summarize the global situation and the ethical dilemma of Apple?

Discuss fully what Apple is attempting to achieve with it's global tax strategies and discuss how they do it. In other words, explain the "loop hole".

How is it possible that Apple, as a U.S. company, does not pay the regular corporate tax rate?

Answer 1

Aplle stratergy is that by showing that its profits are 2/3 from globally so that it no need to pay taxes for revenue that earned outside US where it is trying to evade tax as the tax rate is higher in US. So it is trying to show that it is paying taxes in other countries with lower tax rates so that in can minimise the amount to be paid in tax in US.

Corporate tax is levied on profits of a firm so the lower it shows profits the less amount it will pay in the form of tax.

The loop hole in this stratergy is that Govrnment cant levy taxes on profits eraned outside US. So apple is Using thsi technique to show that 2/3 of its profits are earned globally.

Ethically apple is trying to cheat the government by evading tax which will make the Government loose revenue which is spent on people of US for their benefits.