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05/31/2013

International Irish woman of mystery: Apple's Cathy Kearney

Apple-cork
Apple Operations International, an Apple subsidiary in Ireland, is said to be located at Apple's European headquarters in Hollyhill, Cork. (Michael MacSweeney/Reuters)

Who is Cathy Kearney?

Kearney, through her position as Apple's key executive at the firm's European headquarters in Cork, Ireland,  is at the centre of the storm regarding billions of Apple's profits moving through Ireland and allegations by the U.S. Senate that Apple is avoiding paying their fair share of American taxes because of profit shifting.

The U.S. Senate subcommittee on investigations has a lot of questions for Apple -- one of them being how an Irish subsidary could earn $22 billion in 2011 yet only pay $10 million in taxes.

The Irish press call Kearney a reclusive genius. She's credited as the mastermind behind the successful Irish operation, managing billions of profits through the sales of iPads, iPhones and other Mac computers. Yet, she doesn't do press interviews and would rather put Apple's record before the camera rather than herself.

But it is Irish law, not Kearney, that allows Apple to move around a larger U.S. tax bill. How it works is essentially like this, according to the New York Times and the  Guardian. American tax authorities are concerned where companies are incorporated and tax officials in Ireland focuses more on where firms are managed and control. Apple, based in California, tells the U.S. authorities that their Irish companies have a Cork address. Then, Apple tells the Irish that the same companies are "managed and controlled" in the U.S., the Guardian says.

One company in particular, Apple Operations International, has not paid corporate taxes in four years meanwhile they have made profits in excess of $30 billion, the Guardian notes.

The Guardian's Simon Bowers has done some remarkable work trying to track the elusive Kearney down. The financial reporter has even found the modest farm house that the 49-year-old shares with her family near to the Cork Apple headquarters. He's done some old-fashioned door-knocking to try to talk to her but he's been unable to get her.

Apple CEO Tim Cook denies they are tax dodgers. As the we reported in a previous post, Cook argues Apple is a good corporate citizen, creating 600,000 U.S. jobs, including 55,000 for Apple employees and another 550,000 in other industries.

"Apple is likely the largest corporate income tax payer in the U.S., having paid nearly $6 billion in taxes to the U.S. Treasury in FY2012. These payments account for $1 in every $40 in corporate income tax the U.S. Treasury collected last year," according to Cook's written testimony to the Senate on May 21.


Tanya Talaga is the Star's global economics reporter. Follow her on Twitter @tanyatalaga

 

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