WASHINGTON-- Even as Apple became the nation's most profitable technology company, it avoided billions in taxes in the United States and around the world through a web of subsidiaries so complex it spanned continents and surprised experts, a congressional investigation has found.
Some of these subsidiaries had no employees and were largely run by top officials from the company's headquarters in Cupertino, Calif., according to congressional investigators. But by officially locating them in places like Ireland, Apple was able to, in effect, make them stateless -- exempt from taxes, record-keeping laws and the need for the subsidiaries to even file tax returns anywhere in the world.
In 2011, for example, one subsidiary paid Ireland just one-twentieth of 1 percent in taxes on $22 billion on pretax earnings from various operations; another did not file a corporate tax return anywhere and has paid almost nothing on $30 billion in profits since 2009.
Overall, Apple's tax avoidance efforts shifted at least $74 billion from the reach of the Internal Revenue Service between 2009 and 2012, the investigators said.
Although the Senate examination of Apple was started by a Senate subcommittee more than 18 months ago, investigators discovered one major subsidiary in Ireland only Sunday night. A Senate hearing on the issue is scheduled for Tuesday, and will include testimony by Apple's chief executive, Timothy D. Cook.
Apple declined to comment, except to make available a text of the testimony Cook is expected to provide at the hearing.
"Apple does not use tax gimmicks," Cook is expected to testify.