US tech giant Apple has shifted an estimated $8.9 billion in untaxed profits from its Australian operations to a tax haven structure in Ireland in the last decade, an investigation by The Australian Financial Review has found.

Last year Apple reported pretax earnings in Australia of only $88.5 million after it sent an estimated $2 billion of income from its Australian sales to Ireland via Singapore, where Apple negotiated a secret tax deal in 2009.

The Financial Review has obtained 10 years worth of financial accounts for Apple Sales International, the secretive Irish company at the heart of Apple’s international tax arrangements, which reveal the mark-up Apple charges for intellectual property on its products around the world.graphic

“Newspapers have had lots of stories about tax avoidance by Microsoft and Google and Apple, but there are hardly any numbers,” said University of Sydney senior lecturer of taxation law Antony Ting, who has published a review of Apple’s tax arrangements.

“Now, for the first time, there are numbers for the profits that escaped from Australian tax.”

The G20 meeting in Sydney last week gave US tech giants Google, Microsoft and Apple a deadline to reform their tax arrangements, ­warning that “by the Brisbane summit [in November], we will start to deliver effective, practical and sustainable measures” against international tax avoidance.

Apple Sales International has reported more than $US100 billion ($112 billion) of profits in the last five years. Its accounts show it has paid less than 50¢ in tax on every $1000 of income.

The company was the focus of a scathing report last May by the US Senate’s Committee on Homeland Security and Government Affairs, Permanent Subcommittee on Investigations.

“What is truly surprising in the Apple case is its brazenness,” high-profile US tax commentator Lee ­Sheppard told the Financial Review from Los Angeles.

“We’re not easily shocked by ­transfer pricing practices that the US government accepts, for better or worse,” she wrote last year in Tax Notes International.

“We’re talking gross worldwide revenues the size of the California state budget, and no tax being paid anywhere on a huge chunk of profits.”

But the report offered few financial details beyond headline numbers which showed that from 2009 to 2012 Apple Sales International reported $US74.1 billion in profits.

The business’s earnings are at the heart of the debate over how much tax Apple pays around the world.

New CFO, old tax strategy

While the man likely to have been the architect of Apple’s tax strategy, chief financial officer Peter Oppenheimer, announced his retirement in the US on Tuesday, few expect any changes to Apple’s tax strategy.

Apple Sales International extracts the bulk of Apple’s huge profits on sales outside the United States, which it claims as payments for intellectual property and intangibles. But the Irish-domiciled company has never filed its financial returns with the Companies Registrations Office in Dublin.

It initially filed accounts for its parent company, Apple Operations International, which receives funds only from dividend payments and gives limited visibility into how Apple shifts profits. Since 2003 Apple Sales International has filed no financial reports at all in Ireland.

When the US Permanent Subcommittee of Investigation tabled excerpts of Apple Sales International documents, Apple insisted that virtually all figures be redacted.

However, Apple found itself caught by Section 601CK of Australia’s Corporations Law. As a registered foreign company doing business here, it was required to file annual financial statements with the Australian Securities and Investments Commission from 2000 until 2009.

The Apple Sales International accounts show the margin that the Irish company charged each year to resell iPhones and iPads to Apple’s local subsidiaries in Australia, Europe and elsewhere. When applied to the sales figures in Apple’s Australian accounts, it is possible to calculate how much Apple Australia paid Apple Sales International for access to Apple products.

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