Corporations like Google and Apple that keep foreign income overseas to avoid high U.S. taxes are much in the news lately. Apple has been called in to testify before Congress on the $100 billion it has banked in Ireland. Google, which employees similar strategies but also keeps billions in the Bahamas via the Double Irish tax strategy, has also been lambasted in the UK press.
But Google chairman Eric Schmidt told the BBC that the kerfuffle is all rather confusing.
“What we are doing is legal. I’m rather perplexed by this debate, which has been going in the UK for some time, because I view taxes as not optional,” the former Google CEO and current chairman said on BBC Radio 4 today.
Taxes are legally required, Schmidt said, and you pay the taxes that you owe, adding that “it’s not a debate.”
His point, essentially, is that if governments want more tax income, they should set up their regulations and governance to collect it. But whining about corporations using legally-provided loopholes or tax-limiting strategies is rather pointless.
Apple CEO Tim Cook made basically the same point to Congress last week:
“We pay all the taxes we owe, every single dollar,” Cook told Senator Carl Levin (D-Mich). “We don’t only comply with the letter of the law, but the spirit of the law.”
Because Apple keeps its international revenues in Ireland, the Apple CEO had the added bonus of being able to truthfully say that the company does not stash its money away on some Caribbean island. And, he added, Apple is the single largest corporate taxpayer in America, having paid $6 billion to the U.S treasury in 2012.
For its part, Ireland is quick to say it is no tax haven for corporations, which other countries may find difficult to believe, given that Apple paid about two percent tax there in 2012.
As of early this year, about $225 billion was held overseas by tech companies including Apple, Microsoft, Google, Oracle, and Cisco Systems.
Image credit: Jolie O’Dell/VentureBeat
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