Paradise Papers: details of Apple's tax arrangements revealed in leaked documents

The Paradise Papers -- a massive cache of documents leaked to newspapers and journalists -- reveal the tax avoidance strategies used by millionaires, billionaires and businesses around the world. The leaks comprise over 13 million documents, and it shows the financial structure and offshore accounts for many big-name companies.

Included in the list is Apple -- a company already known to have taken advantage of the "double Irish" tax loophole in Ireland to massively reduce its tax bill. The Paradise Papers show that Apple made use of another tax haven after it faced criticism for its exploitation of Irish taxes and a clampdown on the loophole.

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Until 2014, Apple funneled its non-American sales -- accounting for more than half of its revenue -- through the Republic of Ireland, enabling it to never pay more than 5 percent tax on its foreign profits. An investigation by the European Commission showed that one of Apple's Irish companies paid just 0.005 percent tax.

But following exposure of and interest in the Double Irish arrangement, Apple then secretly shifted key parts of its business to Jersey where it continued to benefit from exceedingly low tax rates. While the arrangement is entirely legal, it will still raise many questions.

Emails between Apple and Appleby -- the offshore finance firm at the center of the Paradise Papers -- show that Apple wanted to keep its Jersey operations secret. The company moved Apple Operations International and Apple Sales International to Appleby's Jersey offices, effectively enabling it to avoid paying billions in tax.

The very nature of the financial arrangements, and the details included in the Paradise Papers, is incredibly complex, and analysts are still working through the documents to unpick exactly what is going on. But early analysis suggests that Apple Sales International (ASI) held many of the rights to Apple's intellectual property. By selling the rights from ASI in Jersey to another Apple company in Ireland, the Irish company would be able offset this as a tax write-off.

With Tim Cook having previously said "we don't depend on tax gimmicks," Apple will be facing some serious questioning as more details emerge over the coming days.

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