Apple Inc Accused of Tax Avoidance in Australia After Beating Samsung as Most Desired Brand in Emerging Markets

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By Reissa Su | March 6, 2014 7:15 PM EST

Apple Inc has been accused of shifting its profits in Australia worth $8.9 billion to avoid paying the correct amount of tax. According to an investigation conducted by the Australian Financial Review, Apple has directed its earnings in Australia to Ireland in the past 10 years.

REUTERS
Apple's iPhone 5Cs phones are displayed on racks bearing the logo of China Mobile, at a mobile phone shop in Beijing December 23, 2013.

Taxpayers Australia has called for a crackdown on international companies that engage in tax avoidance practices by using offshore havens. According to the Australian tax payers group, Mark Chapman, the recent allegations concerning Apple Inc's untaxed profits in Australia only highlights the lack of a level playing field for local businesses when it comes to tax payments.

Mr Chapman said global firms like Apple can set up complex structures to divert profits to a holding company in Ireland.  As reports have said, Apple's Australian operations acted as "low margin shop fronts" that are fully taxable based on their small profits.

Apple Inc has paid $36.4 million in tax for 2013 fiscal year despite declaring revenues of over $6 billion inAustralia. The Cupertino-based tech giant generated $52 million after paying $88.5 million, according to The Australian. The company had acquired a net profit after tax from $58.5 million in 2012  to $40.1 million when Apple paid taxes in Australia.

Despite a drop in profits, Apple Inc hit an an all-time high in revenues from $5.99 billion in 2012 to $6.1 billion in 2013. According to documents filed in the Australian Securities and Investments Commission, Apple Inc Australia had paid $154 million dividend to its parent company in the U.S.

The Australian Financial Review obtained the financial accounts of Apple Sales International in the past 10 years and used the data as the basis of its investigation. Apple Inc has not yet confirmed if the data used in the review were accurate.

Apple Inc is one of the several multi-billion dollar companies, including Microsoft and Google Australia, to be under scrutiny for the use of tax havens to reduce tax payments.

In 2013, the Organisation for Economic Cooperation and Development (OECD) was asked to develop measures to stop corporations from using tax havens to escape local tax payments. 

Apple still the most coveted smartphone brand in the world

Despite the latest tax controversy in Australia, Apple Inc is doing well in emerging markets and has overtaken Samsung as the most desired smartphone brand.  

Smartphones running on Android OS may be the most accessible for customers in the developing world since they are usually cheaper compared to premium brands like Apple. However, the higher cost of iPhones is apparently not a problem for consumers in Brazil, India, China, Nigeria and Vietnam, according to research firm Upstream.

In a survey of 4,500 consumers from the abovementioned countries, 32 per cent said they wanted an Apple device while 29 per cent long to have a Samsung smartphone. Thirteen per cent of consumers said they wanted a Nokia device.

Consumers also stated functionality as the main reason for choosing a smartphone brand. Brazilian customers said trust in the brand is next motivator. For the Chinese, Nigerians, Indians and Vietnamese consumers, brand aspiration is key.

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(Photo: REUTERS / )
Apple's iPhone 5Cs phones are displayed on racks bearing the logo of China Mobile, at a mobile phone shop in Beijing December 23, 2013.
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