Legal Aspects of International Trade for Apple - MyAssignmenthelp

Question: Discuss about theLegal Aspects of International Trade for Apple. Answer: Introduction Apple is an American Multinational technology company that was founded in the year 1976 by Steve Jobs, Steve Woznaik and Ronald Wayne and was incorporated as Apple Computer. The head quarter of the company is located in Cupertino, California. It is famous for developing designs, selling computer software, selling several other consumer electronics and providing online services. The company has approximately 478 retail stores spread across seventeen countries including Australia. The company also provides full- time employment to approximately 115,000 people (Payne, 2017). The hardware products of Apple include the Mac personal computer, iPod portable media player, the Apple TV digital media player, the iPhone, the iPad tablet and the Apple smart watch. The software products of the company include the Safari web browser, maCOS and the IOS operating systems, the iTunes media player and the IWork and the ILife creativity and productivity suites. The several online services provide by the company include the iTunes store, iCloud, Mac App store, IOS App store and Apple Music. The company is one of the biggest companies in the world and it is growing rapidly. It has set up its new campus namely Apple Park on its Hewlett Packard campus. The company has been assisting its employees in shifting them to the new location however; the process of shifting all the 12000 employees will take approximately six months (Nwogugu, 2015). The products and services provided by the company are regulated by the Australian Consumer Law (ACL). The Australian Consumer Law states that the consumers can come up with any defects in the products or services provided by the company either at the delivery time or after the products have been delivered. The customers may complain about the products within a reasonable duration from the delivery date except the situation when there is proper justification to the cause of failure of bringing complaint within the adequate duration. ACL also states that the customer shall not be required to incur any additional costs when he/ she complains about some defective product. However, the respective sellers are to be contacted by the consumers in case of any complaints about defective products. It is also the responsibility of the customers to obtain complete information from the sellers regarding the available replacement and repair options during the time of purchase (both local and overse as). The regulatory framework of Australian Consumer Law states that the company provides a warranty plan limited to one year to all its customers. Apple entitles its consumers to make complaints within one year from the purchase date of the products regarding any defects in its products that the customers come across. The company does not charge any amount for repairing or replacing such products. The customers can contact either the Apple retail store or the telephonic technical support of Apple or the authorized service provider of Apple. The company also enables the customers to mail-in when the customers want replacement or repairing of the defective products. The customers located overseas can contact the sellers in order to know details about the products replacement and repairing options. Although the guidelines related to the telephonic technical support are not mentioned by ACL, but the company enables the customers to obtain technical support over telephones. The company has also entered into an agreement namely Advance Pricing Agreement (APA) that aims at resolving the uncertainties in the cross-border transactions and the agreements between relevant parties (McClure, Lanis Govendir, 2016). The problems pertaining to the international transfer pricing are solved through double taxation policy that is included in the agreement. It enables the tax authorities and the taxpayers to find the solutions related to issues of international transfer pricing. The ATO has been sorting the profit shifting and cross border tax structures made by Apple in order to reduce the amount of taxes to be paid in countries like Australia that have high- taxing structures. The governments have changed their approaches of providing special deals to the multinationals that enabled the companies to pay lesser taxes lawfully as they now consider that nations have the right to impose taxes. APA has enabled Apple to lawfully shift the company profits to lower tax jur isdictions. This has enabled the company to avoid payment of local taxes. However, such proposition has been removed and now the company is liable to pay the taxes (Ting, 2014). It has been stated by ATO that the Australian tax system cannot be compared with the European tax system. The anti-avoidance laws of the Federal Government of Australia have prevented the companies from utilizing artificial arrangements for avoiding the acceptance of the profits. Therefore, the Government of Australia has passed a new legislation that prevents the companies from evading corporate taxes by shifting their profits (Cheung, 2014). The international tax system and the national tax system have tried to maintain pace with the developments in technology that have highly motivated the global economy. This is enabled by the intangible and portable structures. The tax system was developed by various countries when the tradeable assets were easy to locate and tangible in order to make those assets accountable. Apple had to pay a tax amounting to $80.3 million for earning a revenue of $6 billion due to complex tax structure that allowed the company to shift its profits to an Irish subsidiary. However, Apple argued that it had complied with all the local tax obligations. Apple argued that ATO had permitted tax rulings in Apples favor even when stringent approach was adopted towards the multinational companies. It was stated by the company that a major part of the revenue was attained from the sales of the final products to the Australian customers and businesses. The finished goods are purchased at higher prices by the company from the offshore associates. This leads to profits being proportionate with the companys activities in Australia. Apples Advance Pricing agreement has expired and the company is inclined to enter into further agreements with ATO. The government of Australia is highly dependent upon the corporate taxes that affects the reputation of the company. According to ATO, when it has a cordial relationship with a company based upon complete disclosure, it permits the companies to enter into APA agreements. The company further argued that not only it has cordial relationships with ATO but also acts in compliance with the countrys tax obligations (Devereux, 2016). Apple argued that it wanted to renew its APA agreement as it had expired. However, it was stated by ATO that it was not possible to move forward the agreement instead, a regular review of the agreement was required in order to ensure the appropriateness and relevance of the agreement to the businesss nature in Australia (Huesecken Overesch, 2015). Further, legal actions have been initiated against Apple by another legal structure that regulates the rights of consumers in Australia, which accused Apple to have used a software update to invalidate the iPhones that got their cracked screens fixed by a third party. ACL governs Apples operations in Australia. Using a software update, the company had invalidated thousands of iPhones and tablets and it turned down from unlocking them as they were repaired or serviced by some non-Apple or third party repairers (Corones, 2016). However, ACL stated that the rights of the consumers under ACL cannot be invalidated if the customers get the products repaired by some third party as the consumer guarantee rights are independent of the warranty provided by the companies. ACL has alleged Apple of having engaged in misleading conduct and having made deceptive representations to its customers about its software updates and customers rights of getting their products repaired by the company. The Australian Competition and Consumer Commission (ACCC) that accused the company of giving deceptive advertisements brought legal actions against Apple (Corones, 2013). ACCC was seeking corrective notices, declarations, injections and compliance program orders against the company. Section 18 of the ACCC states that any deceptive or misleading conduct or likely to be deceptive or misleading conduct of any corporation involved in trade and commerce is strictly prohibited. Section 12 DA of the Australian Securities and Investment Commission Act 2001, also prohibits deceptive or misleading conduct in financial services. They strive to protect the consumers by prohibiting the businesses from deceiving the customers. This legal structure is applicable to all the situation s that have relation with trade and commerce in Australia (Corones, 2014). Despite variety of products offered by the company, the customers of Apple are not satisfied with the invalidation of the products and refusal of the company to restore them on getting them repaired by some third party (Julien, 2016). The customers have expressed their opinions and have stated that it is not always convenient for them to get their products repaired from Apple repairers. Therefore, they do not want the company to disallow the services. Disallowing the services shall lead to breach of the provisions of ACCC and ACL Australia. According to Apple, thousands of Australians are provided employment opportunity in the areas of IT, retail and logistics by the company and the company pays corporate taxes and payroll taxes that amount to millions of dollars. The company also mentions that it has attempted to review the international tax policies laid down in the multinational forums and frameworks. Apart from providing employment opportunities to the Australians, the company has also provided platform to the people of Australia for marketing and selling their products in both local and global markets. Therefore, it can be stated that the taxation systems in Australia must bring changes with respect to the changes in the economy. Australia is one of those countries that are highly dependent upon foreign direct investment. Therefore, the taxation systems must cooperate with the multinational companies (Kaye, 2014). However, the countries must join hands to prevent these companies from shifting their profits. Methods of combined reporting must be adopted that would compel these companies to disclose their profits and losses in all those countries in which they operate. For this purpose, the companies may adopt the approach of consolidation of the OECD profit splitting. It is logical and obvious in todays global economy that the companies would want to establish their businesses where they can obtain advantages from the beneficial rules of the countries. In the same manner, they countries would also want to implement a competitive corporate tax system such that they can attract and retain the economic activities within the country. However, it must be ensured that no damage is caused to the economy or policies of other countries while implementing a tax system within the country. It is necessary for the legal frameworks of the countries to assure that the operations of the multinational companies comply with the legal framework of the respective countries. References: Cheung, A. S. (2014). Location privacy: The challenges of mobile service devices.Computer Law Security Review,30(1), 41-54. Corones, S. (2016). Misleading premium claims.Australian Business Law Review,44(3), 188-203. Corones, S. G. (2013).The Australian consumer law. Thomson Reuters, Lawbook Co.. Corones, S. G. (2014).Competition law in Australia. Thomson Reuters Australia, Limited. Devereux, M. (2016). Measuring corporation tax uncertainty across countries: Evidence from a cross-country survey. Huesecken, B., Overesch, M. (2015). Tax Avoidance through Advance Tax Rulings-Evidence from the LuxLeaks Firms. Julien Jr, R. (2016).The cybersecurity aspects of Apple Pay(Doctoral dissertation, Utica College). Kaye, T. A. (2014). The Offshore Shell Game: US Corporate Tax Avoidance Through Profit Shifting.Chap. L. Rev.,18, 185. McClure, R., Lanis, R., Govendir, B. (2016). Analysis of Tax Avoidance Strategies of Top Foreign Multinationals Operating in Australia: An Expose. Nwogugu, M. C. (2015). The Case of Apple, Inc., and the SP-500 Companies: Managerial Psychology, Corporate Governance and Business Processes. Payne, B. (2017). Brand Positioning and its Usefulness for Brand Management: the Case of Apple Inc.Newcastle Business School Student Journal,1(1), 51-57. Ting, A. (2014). iTax-Apple's International Tax Structure and the Double Non-Taxation Issue.