Yes, the iPhone 6 is a miracle, but it's Apple's tax affairs that deserve a double take

The company holds more than $100bn offshore

(Getty Images)

I’m going through a rocky patch with my iPhone. The handset itself is blameless. It doesn’t bend and I’m not bothered by the release of a newer, slinkier model.

Nor has my willingness to lavish affection on machines changed much since the late 1990s when, for reasons I could have explained to you at the time, I spent days feeding a Tamagotchi and cleaning up its digital droppings. No, the Phone and I are fine. We’re in sync. The snag is Apple.

It’s harvest time for the richest company in the world. iPhone 6 sales have broken records; CEO Tim Cook is out and about, like a newlywed, telling the world that he “couldn’t be happier”. Money is throwing itself at company balance sheets. All fine and good. It’s what Apple does with their cash that turns this story of “pleasant capitalism” into another one of those complex and rather dreary tales of “unpleasant capitalism”. In short, the company pushes most of its profits offshore to avoid paying tax in America, where corporation rates are high at a peak of 35 per cent.

They have, at the last count, more than $100bn in such accounts. It can’t be moved back into the US without paying the owed tax; so, for the most part, it sits there. Stuck somewhere boring, like a less objectionable version of Lewis Hamilton.

In fact, bizarrely, one way Apple chooses to hold this offshore money – in US government debt – results in American taxpayers effectively paying Apple interest, rather than benefiting from the public services that would result if Tim Cook’s company wasn’t engaged in an (entirely legal) form of tax chicanery.

That’s not to say that people at Apple are corporate velociraptors bent on protecting a mountain of gold from pensioners and veterans. It’s more that, to borrow a line from policeman Bernie Ohls of Raymond Chandler’s The Long Goodbye: “Big money is big power and big power gets used wrong. It’s the system.”

The international tax system is mangled and busted, fooled and fried, then served to multinational companies with a cherry on top by the tax “planners” they hire – and governments who lower corporation tax rates to almost nothing in a bid for a piece of the pie. (A tiny piece, they reason, is better than no piece at all.) Some reformist muscle is, however, now in operation.

Yesterday it was reported that the EU could be set to demand billions of dollars in tax from Apple as it is set to accuse the firm of entering into an illegal deal with the Irish government (both Apple and Ireland deny any wrongdoing). The OECD has organised for a large number of rich nations to link arms against tax evasion and avoidance. Obama is attempting to prevent US companies “redomiciling” to skirt the Yankee taxman (as Pfizer attempted to in their bid for AstraZeneca). All right, all right, all right, all right. We’re still a long way off a fair deal, though.

I doubt I can hold a grudge against my iPhone. It helps that I don’t have to clean up any of its droppings. But I wonder if I’d be so quick to choose an Apple next time: the Cupertino giant should be bracketed with the likes of Starbucks, not given a free ride because, well, you can do a lot more with an iPad than a mochacchino latte.