Apple (NasdaqGS: AAPL - news) is paying less than 2pc tax on its overseas profits, as it moves money through offshoots in low-tax countries and secretive tax havens, such as the British Virgin Islands.
The Sunday Times reports that new documents have revealed that the world’s biggest company paid $713m (£445m) in corporation tax abroad in the year to September 30, as profits grew to a $36.8bn outside America, according to regulatory filings lodged last week.
The technology giant’s overseas tax rate fell to 1.9pc from 2.5pc the year before, significantly below the corporate tax rate of 35pc in the US and 24pc in Britain.
Apple uses legal tax avoidance strategies, channelling much of its business in Britain and Europe (Chicago Options: ^REURUSD - news) through a subsidiary on an industrial estate in County Cork, the Sunday Times reports.
Ireland’s corporation tax is about half the UK level, but many multinational companies pay substantially less as profits end up being siphoned off to related companies in Caribbean tax havens.
Apple is estimated to have avoided more than £550m in tax in Britain in 2011. Its (Euronext: ALITS.NX - news) latest accounts show UK turnover at just over £1bn and profit at £81.3m, generating a tax bill of £14.4m. However, analysis of its filings in America suggest a more realistic figure for UK turnover is £6.7bn. This would imply an estimated profit of £2.2bn and, at the then corporation tax rate of 26pc, a £570m tax bill, the Sunday Times reports.
Apple is the latest in a line of large companies that have been exposed for using legal tax holes which result in the company paying less tax.
Facebook has been accused of "immoral" behaviour after accounts showed that the social media giant paid a corporate tax bill of just over £238,000 last year, despite estimated revenues of £175m.
Accounts filed with Companies House show Facebook's London office paid £238,317 in tax, down from £424,651 the previous year. The amount represents less than 1pc of its 2011 revenues.
At the end of last month David Cameron demanded an investigation into claims of large-scale avoidance while Brussels moved to close European VAT loop-holes enjoyed by Amazon, Skype and Netflix (NasdaqGS: NFLX - news) .
The Prime Minister said HM Revenue & Customs should “look carefully” at cases where international corporations have legally been able to pay no corporation tax - or very small amounts - on billions of pounds of UK revenue.