In the world’s ongoing war against corporate tax evasion, Apple is now under investigation from the Italian judiciary, for alleged fraudulent tax returns of over EUR 1 billion of income.
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Italy has so far led multiple such cases against corporations active within its borders – culminating in the Italian fashion house designers of Dolce & Gabbana being handed a suspended prison sentence of nearly two years, after failing to declare EUR 1 billion in income.
Google and Amazon have also become subjects of Italy’s far-reaching and aggressive enquiry; potentially launched as the crisis-hit country’s tax authorities come face to face with dwindling revenues.
The Apple investigation is focused on two of the managers of the business, who are yet to be named.
The inquiry specifically concerns EUR 206 million of taxable income in 2010, and EUR 850 million from 2011, allegedly recorded as part of the Irish-based subsidiary Apple Sales International’s (ASI) profit.
Arguing against this, the Italian judiciary believes the Italian branch is not a subsidiary of the Dublin office, but its own centre of business in Italy.
Apple uses a comparable arrangement to record its British profits.
As of now, the headquarters in Milan are understood to have been part of a raid, and computers and phone records have been seized.
The legality of this seizure is currently being decided in court.
Case in the USA
A similar case was brought against Apple in May during a US Senate investigation.
The investigation showed that Apple structured its business so the majority of non-US profits were recorded by certain businesses in Ireland which were tax exempt due to an unusual rule in Irish tax law.
In light of the recent allegations, an official statement was released, and Apple strenuously denied the claims.
“The Italian tax authorities already audited Apple Italy in 2007, 2008 and 2009 and confirmed that we were in full compliance with the OECD documentation and transparency requirements.”
They continued: “We are confident the current review will reach the same conclusion.”
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