Apple's tax ruse is astonishingly cynical

Remember when Apple was as fresh, green and wholesome as the fruit it’s named after? I don’t really either, but the most recent news — reported in today’s Times — that Apple is "pursuing the holy grail of tax avoidance" by setting up subsidiaries that are not based in any country is quite astonishingly cynical. 

According to the report, one subsidiary called Apple Operations International has no employees or offices anywhere. It’s certainly a creative solution — but when developing countries lose eight times more to tax evasion than they receive in aid ($385bn according to DFID) and the UK tax gap is estimated at £30bn, the creative minds behind the tax ruse ought to be using their skills elsewhere.

The concept of not registering in any country at all is an interesting one, and something I’ve been researching when it comes to wealthy individuals. Projects like "The World" — a globe-crossing luxury boat containing 165 private residences so that ‘home’ is wherever ‘The World’ is — loosen the ties that usually exist between an individual and a particular country (and their inland revenue.) 

Last year, 1800 Americans gave up their US citizenship. While some renounced their US citizenship for political reasons (often because they object to US foreign policy), a large proportion did so for tax reasons. The US is one of only four countries in the world (the others are the incongruous gang of North Korea, The Philippines and Eritrea) that tax their citizens regardless of where they are living. Most other countries tax individuals on the basis of residence. 

The vast majority of Americans who have expatriated have taken up a second nationality instead, but the US is also unusual in that gives citizens the option of becoming stateless ie. having no nationality at all. There are an estimated 12 million stateless people in the world — people who often face grave difficulties, including a lack of access to state welfare, education or healthcare or travel documents. But a handful of people are known to have become stateless voluntarily.

I’ve spoken to one of them, and next issue I’ll be exploring whether the rich will consider statelessness as a radical way to avoid tax.

Photograph: Getty Images

Sophie McBain is a freelance writer based in Cairo. She was previously an assistant editor at the New Statesman.

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Why relations between Theresa May and Philip Hammond became tense so quickly

The political imperative of controlling immigration is clashing with the economic imperative of maintaining growth. 

There is no relationship in government more important than that between the prime minister and the chancellor. When Theresa May entered No.10, she chose Philip Hammond, a dependable technocrat and long-standing ally who she had known since Oxford University. 

But relations between the pair have proved far tenser than anticipated. On Wednesday, Hammond suggested that students could be excluded from the net migration target. "We are having conversations within government about the most appropriate way to record and address net migration," he told the Treasury select committee. The Chancellor, in common with many others, has long regarded the inclusion of students as an obstacle to growth. 

The following day Hammond was publicly rebuked by No.10. "Our position on who is included in the figures has not changed, and we are categorically not reviewing whether or not students are included," a spokesman said (as I reported in advance, May believes that the public would see this move as "a fix"). 

This is not the only clash in May's first 100 days. Hammond was aggrieved by the Prime Minister's criticisms of loose monetary policy (which forced No.10 to state that it "respects the independence of the Bank of England") and is resisting tougher controls on foreign takeovers. The Chancellor has also struck a more sceptical tone on the UK's economic prospects. "It is clear to me that the British people did not vote on June 23 to become poorer," he declared in his conference speech, a signal that national prosperity must come before control of immigration. 

May and Hammond's relationship was never going to match the remarkable bond between David Cameron and George Osborne. But should relations worsen it risks becoming closer to that beween Gordon Brown and Alistair Darling. Like Hammond, Darling entered the Treasury as a calm technocrat and an ally of the PM. But the extraordinary circumstances of the financial crisis transformed him into a far more assertive figure.

In times of turmoil, there is an inevitable clash between political and economic priorities. As prime minister, Brown resisted talk of cuts for fear of the electoral consequences. But as chancellor, Darling was more concerned with the bottom line (backing a rise in VAT). By analogy, May is focused on the political imperative of controlling immigration, while Hammond is focused on the economic imperative of maintaining growth. If their relationship is to endure far tougher times they will soon need to find a middle way. 

George Eaton is political editor of the New Statesman.