Taxation in a Global Digital Economy

1. S. 442Introduction to Apple’s Tax Affairs

The cases of Multinational Enterprises (MNEs) and their tax affairs have been in the public eye and have provoked a vivid discussion over the last few years. Apple stands among the cases that have caused a public outcry with regard to their sophisticated tax structures which enabled it to shift a respectful part of its profits and be taxed thereon with an effective tax rate of less than 0.005 % through a thoughtful maneuver.

Although Apple did not follow the famous ‘Double Irish Dutch Structure’ that has been used by other US multinationals to enable facile offshore profit shifting, three subsidiaries established in Ireland, two tax rulings issued by the Irish tax authorities, and an intra group transaction between the US headquarters and the Irish subsidiaries were enough to allow the famous American technology company to tax its worldwide income on an almost non-existent tax rate, achieving a double non-taxation of US $44 billion.

Undoubtedly, multinational firms are in a more favorable position than national enterprises since they can take advantage of what has been characterized as ‘stateless income’ mostly due to the norms of freedom of cont...