Saturday, May 10 17:00:41
Apple is close to paying a record $3.2bn (E2.3bn) for Beats Electronics with both companies having connections to Ireland and our low corporate tax rate.
Founded by rapper Dr. Dre and legendary music producer Jimmy Iovine, Beats Electronics is best known for its "Beats by Dr Dre" line of trendy headphones that vie with the likes of Skullcandy, Sennheiser Electronic and Bose. This year, it launched a music service that has won plaudits for its slick design and human music curation, versus the computer-algorithms that determine playlists for most of its rivals.
Beats established a "brass plate" base in Ireland in 2012 by setting up three Irish-registered companies despite not having any known operations in this country. Its Irish-registered companies have no employees, but they do have directors based here.
Beats Electronics LLC is a privately held US firm and Beats Electronics Holding Limited is an Irish registered company that is domiciled in Jersey, Channel Islands and is the owner of the group's international operations.
The FT says that a decade after Steve Jobs transformed the music industry with the iTunes download store and the iPod digital music player, the deal is likely to be seen as an admission that Apple needs to look outside its Cupertino labs to continue making an impact.
While Beats commands a leading position in the premium headphone market, its real value to Apple is in revitalising its "cool" at a time when iTunes has waned in popularity and Samsung's marketing campaigns have savaged the iPhone's brand.
Apple has come under a lot of pressure recently for how it handles its group- wide international tax affairs.
Apple came under fire last year from a US Senate Subcommittee on Permanent Investigations, which said that the company had kept billions of dollars in profits in Irish subsidiaries and paid little or no taxes to any government.
The Committee urged closing loopholes like those it said Apple used to avoid $9bn in U.S. taxes in 2012.
The subcommittee said Apple used Ireland as a base for a web of offshore holding companies and negotiated a deal with the Irish government for a tax rate of less than 2pc. The top U.S. corporate income tax rate is 35pc.