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Apple, which has been caught in the tax invasion scoop in Italy for over four years now, has agreed to pay the Italian tax department a sum of $348 million it owes for the period 2008-13. The tax evasion case was first brought to light in 2013, when Apple’s Italian arm – Apple Italia – was found to have evaded a staggering $1.3 billion in revenues from the tax authorities.

Following initial investigations, the department found that Apple had managed to transfer a part of its profits to its subsidiary in Ireland. The department also identified discrepancies in the company’s annual profits vs. the taxes it paid for the years 2008-13.

Apple Italia reportedly paid only $32.77 million in taxes, when its annual profits were $1.3 billion for the period. Apple Inc. has finally reached a consensus with the tax department and agreed to settle the amount to end the case. The tax department opined that the sum paid by Apple is a fraction of the actual taxes it was liable to pay for that period.

On Apple’s front, this is a complete turnaround given that it refused to acknowledge the tax evasion case earlier. Apple CEO Tim Cook even termed the case as a “political crap”. He had stated previously that the company “pays every tax dollar it owes.”

During an interview Cook described that Apple was in fact the biggest tax payer in the United States. He clarified that the huge amount of foreign capital in Apple’s pocket is mainly due to the fact that two-thirds of the company’s operations are done in foreign markets.

As of now, the evidence clearly points towards Apple cleverly evading tax by transferring its profits for the Italian market into its subsidiary in Ireland. As Ireland demands a lower tax rate for corporates, Apple saved substantial profits. Apple in fact, lists Apple Italia as a “consultant” for Apple Ireland, which makes it legitimate for the company to channelize its profits earned in the Italian market.

Its not just Apple though. Other multinational companies have come under the scanner and are suspected of using the same methods employed by Apple to evade tax.

In a report compiled by the Organisation for Economic Co-operation and Development (OECD), it was found that multinationals save a gargantuan $100 billion to $240 billion through tax-minimizing schemes globally.

Other tech giants such as Facebook and Google are also reportedly under the scanner of the Italian tax department. The department is investigating files of Facebook’s headquarters in Milan. On the other hand, Google — as a preventive measure — is in talks with the tax department to check whether it owes the department any money in taxes in order to avoid similar law suits.


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