Apple's long offshore trail to Australia
Documents filed by US congressional investigators claim Apple products manufactured in China are resold to Apple retailers in Australia after an Irish subsidiary takes ownership of the products mid-transit - but only on paper.
The Irish subsidiary, known as Apple Sales International, resells the product to Apple retailers in Australia at a substantial profit, despite never possessing the product.
"ASI never took physical possession of the products it ordered from the third-party manufacturer," the report says.
"ASI took title to the manufactured products while they were being shipped to Apple's Asian distribution centres.
"When they arrived, ASI sold the products to Apple Singapore at a substantial profit."
Before a reorganisation in 2012, the same structure applied, apart from the inclusion of Apple's Singapore subsidiary.
Products would be resold directly to Australian retailers.
"For example, ASI purchased the finished goods from the manufacturer in China and then resold them to an Apple retail store in Australia, with ASI taking ownership of the products while in transit to Australia, then reselling them at a substantial profit to the Apple retail entity upon arrival."
The documents also outline how Apple uses a global network of subsidiaries to shuffle profits around the world through low-tax jurisdictions such as Ireland and Singapore, to avoid paying higher taxes elsewhere.
US investigators said "disregarded entities" such as the ones in Ireland and Singapore were used to avoid US income rules on foreign company sales.
"The rules are designed to prevent multinational corporations from setting up intermediary entities in tax havens for no purpose except to buy finished goods and sell them on to related entities," they said.
"Dodging these rules allowed Apple to concentrate profits from the sales revenue in the tax havens." The documents were based on testimony from top Apple sales executives.
Apple chief executive Tim Cook defended his company to senators on Tuesday, after they accused his company of avoiding billions of dollars in US tax.
"Our foreign subsidiaries hold 70 per cent of our cash because of the rapid growth of our international business," he said.
"We use these earnings to fund our foreign operations, such as spending billions of dollars to acquire new equipment to make Apple products and to finance construction of Apple retail stores around the world."
Frequently Asked Questions about this Article…
The Senate inquiry found documents suggesting Apple used a network of offshore subsidiaries to bolster offshore profits. Investigators say products sold in Australia were handled on paper by subsidiaries in low‑tax jurisdictions such as Ireland and Singapore, allowing Apple to concentrate profits outside higher‑tax countries.
According to the documents, Apple Sales International (ASI), an Irish subsidiary, took legal ownership of products while they were in transit from Chinese manufacturers, even though it never physically possessed them. ASI then resold those products at a substantial profit to other Apple entities or retailers, on paper boosting offshore profits.
Investigators say finished goods made in China were assigned to Apple’s Irish subsidiary while being shipped to Asia. That Irish entity took title to the goods on paper mid‑transit and then resold them—either to Apple Singapore or directly to Australian retailers—at a significant markup, despite not physically handling the products.
The documents highlight Ireland and Singapore as low‑tax jurisdictions in Apple’s global network of subsidiaries. Investigators say these jurisdictions were used to route and concentrate profits from international sales, enabling Apple to benefit from lower tax rates on those earnings.
The inquiry refers to some subsidiaries as “disregarded entities,” meaning intermediaries set up in tax havens with little or no real business purpose other than buying finished goods and selling them on to related entities. Investigators contend such structures were used to avoid U.S. income rules on foreign sales and concentrate profits in low‑tax locations.
Tim Cook defended Apple, telling senators that about 70% of the company’s cash is held in foreign subsidiaries because of rapid international growth. He said those earnings are used to fund foreign operations, such as buying equipment for production and financing construction of Apple retail stores worldwide.
Yes. The documents note a reorganisation in 2012. Before that change, a similar structure applied but with Apple’s Singapore subsidiary included; products were resold directly to Australian retailers under that earlier arrangement.
The inquiry highlights regulatory and reputational issues around multinational tax planning. For everyday investors, the key takeaways from the documents are that Apple has used offshore subsidiaries to concentrate profits in low‑tax jurisdictions, holds a large portion of cash in foreign entities, and faces scrutiny from U.S. investigators—factors that can prompt further regulatory attention or public debate about corporate tax practices.
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