Tax Avoidance Strategies of Multinational Companies: A Case Study of Apple Inc.

This study concentrates on the tax avoidance strategies of multinational companies using the case study of Apple Inc. Objectives of the analysis include identifying strategies that could be exploited by multinational companies to avoid taxes and to find improvements for the Sri Lankan tax system based on the loopholes that multinational companies could exploit.

The methodology consists of a critical analysis based on literature and secondary data. Findings of the study include thin capitalization, manipulation of transfer prices and royalty payments, Double Irish Arrangement and Dutch Sandwich, tax inversion and cost sharing agreements as some of the tax avoiding strategies used by multinational companies.

Recommendations of the study applicable for the Sri Lankan context include addressing the loopholes of the tax system by implementing country-by-country reporting at least for the companies headquartered in Sri Lanka, a common reporting standard for all the companies, formulate and implement Controlled Financial Corporation rules and to limit certain incentives including tightening of foreign dividend income regulations.