07/11/2017 Business Briefing

This is Business Briefing.

I'm David Eades.

The Paradise Papers reveal tech

giant Apple has a pile of cash worth

tens of billions of dollars

in Jersey, where it pays no tax.

The US President visits South Korea

as he continues his tour of Asia.

Yesterday, he talked tough on trade,

but can we expect more

of the same today?

And on the markets: The price of oil

still holding above $64 per barrel.

It has dropped a tiny bit,

but still very much on the up

after the so-called crackdown

in Saudi Arabia by King Salman.

We also have the Australian All

Ordinaries.

There are new revelations

from millions of leaked documents

known as the Paradise Papers.

The technology giant Apple has been

managing most of its untaxed cash

reserves offshore,

on the Channel Island of Jersey.

It moved the money to Jersey

after a tax loophole

in Ireland was closed.

Although the company has

done nothing illegal,

its tax arrangements have been

criticised by EU and US officials.

Our business editor

Simon Jack reports.

A rapturous reception

for the latest iPhone.

It's the most popular and profitable

consumer product of all time.

It's generated hundreds of billions

in profits for Apple

since it was introduced

ten years ago.

What these papers show is just how

determined Apple has been to keep

the tax bill on those

profits as low as possible.

And how keen some governments,

lawyers, and advisers have been

to help them do it.

For many years, Apple sent profits

made outside the Americas

to Ireland, where an elaborate

corporate structure meant it paid

nearly no tax on the

billions it was making.

Taxes that would have been due

to the United States,

where politicians started applying

pressure to a defiant Apple CEO Tim

Cook.

We pay all the taxes we owe,

every single dollar.

We not only comply with the laws

but we comply with the spirit

of the laws.

We don't depend on depend

on tax gimmicks.

So, no more fiendishly complicated

tax arrangements, right?

Wrong.

Documents obtained from the law firm

Appleby, based in Bermuda,

show that when Ireland

shot that scheme down,

the company went shopping

for a new way to keep

their tax bills low.

A questionnaire was sent

to Appleby's offices in seven tax

havens, all British,

including questions that

made their intention clear.

"Can you confirm that an Irish

company," meaning Apple subsidiary,

"can conduct management activities

without being subject to taxation

in your jurisdiction?"

After this offshore beauty parade,

Apple plumped for Jersey,

and company accounts published

since show there's been no

discernible increase in the rate

of tax paid worldwide.

Now, let's be clear,

Apple has done nothing illegal

but hundreds of billions of dollars

remain tangled in a web of low-tax

jurisdictions, seemingly

beyond the reach of any government.

The tax equivalent of outer space.

And, as these documents show,

this is a system that has

continually eluded international

attempts to reform it.

The boss of the international

organisation trying to fix this

problem at that it's

a work in progress.

Changing the rules that make it

legal means that very of these

companies today pay very

little or no tax at all.

This is what it's about.

This is what is happening and this

is what we're working on.

Apple actually pays a lot of tax,

more than any other company

in the world, but not as much

as many think it should.

It's also not alone.

Other multinationals use similar

structures and US companies alone

are estimated to have over $2

trillion stashed offshore.

The Paradise Papers showed

the lengths to which they and their

advisers are prepared to go

to keep their tax bills low.

Simon Jack, BBC News.

With me is our economics

correspondent Andrew Walker.

Interesting stuff. In terms of these

practices, is it standard?

The basic

idea is to minimise the tax bill and

it is common indeed. This specific

arrangement in Ireland, whereby its

companies were not resident anywhere

for tax purposes doesn't seem so

prevalent. Having a legal presence

in a place where corporate tax rates

are low or zero is not unusual at

all. And there have been some

estimates of how much tax is lost as

a result the government and the

OECD, we saw their boss in Simon's

report, they have published figures

in the range of 4% to 10% of total

corporate tax revenue, which comes

to a global annual figure in the

wide range, hard to pin down, of

$100 billion to $200 billion a year,

which is important for companies

dependent on that revenue because it

is hard to collect income taxes or

value-added taxes and that kind of

thing. There is an international

effort to do something on this.

Is

it going to work?

This is

co-ordinated by the OECD and he

tries to address issues like the

misalignment of tax policies which

allow profits to slip through the

holes so they are not taxed

anywhere. And to try to ensure that

where profits are declared there is

a relationship to where the activity

takes place. What it won't tackle is

diverges in corporate tax rates. It

is zero in some places and even in

the main countries there is a wide

range of 12% in Ireland, if they pay

the tax, and 35% in the US with

state taxes on top of that.

Thank

you very much indeed. Talking about

the US :

The US President has

arrived in South Korea

as he continues his tour of Asia.

Yesterday, he was in Japan

where he held a joint press

conference with Prime

Minister Shinzo Abe.

Although the situation

in North Korea remains top

of the agenda, President Trump

was quick to criticise the state

of trade ties between

the US and Japan.

Rico Hizon joins us from our Asia

business bureau in Singapore.

He is no role, Mr Trump, what you

expect in Seoul?

Trade, trade,

trade, of course, apart from North

Korea, it will be at the forefront

of Mr Trump's visit to Seoul. He

called the career Korea- US trade

deal horrible and we will see the

tones it down when he with Moon

Jae-in later today. He says he wants

to achieve fair, free and reciprocal

trading relationships - we will see

if it happens with South Korea. The

free trade agreement has been in

place for five years now but that is

in jeopardy. South Korea is

America's sixth largest trading

partner, $140 billion in goods and

services exchanged in 2016 but since

the deal came into effect, David,

the US deficit with South Korea

doubled to around $28 billion with

Korean auto imports to the US making

up nearly 90% of that deficit. The

US auto industry has been among the

biggest losers so far from this

arrangement but one winner has been

US beef - Korea has been importing

$1 billion in products since last

year, so hopefully they will come to

an agreement regarding this trade

deal going forward.

We will wait to

see. Tough words with a smile,

though, as he is visiting the

country. Thank you very much indeed.

The computer chip industry could be

in line for a big shake-up.

US chip-maker Broadcom has unveiled

a $130 billion takeover

bid for Qualcomm.

The tie-up would create a company

responsible for supplying components

used in more than a billion

smartphones every year.

Samira Hussain reports.

Broadcom and Qualcomm are two of the

world's biggest chip makers. On the

one hand Broadcom provides tips for

Android phones and the other

Qualcomm components are found in

most new iPhones. Now the Qualcomm

has been the dominant player in the

chipmaking business. But in the last

decade it has actually fallen on

some hard times, falling share

price, legal battles with its

biggest client Apple and an

anti-trust investigation in Europe.

And while Qualcomm was dealing with

those issues, Broadcom has been

steadily growing and is now a

dominant player in the chip

business. So the question is will

the deal go through? True that

Qualcomm's issues make the company

right for the picking but many

analysts believe this particular

offer by Broadcom will ultimately be

rejected because it undervalues

Qualcomm.

Now let's brief you some

other business stories.

And, now, what's trending

in the business news this morning.

Business Insider has a story

about one of the most exclusive

apartment blocks in San Francisco.

The article says that

residents are complaining

that their multi-million dollar

homes are now "nearly worthless"

owing to the fact that the tower has

sunk 17 inches since

it was completed in 2008.

Following news of the potential

tie-up between Broadcomm

and Qualcomm, CNBC has compiled

a list of the biggest tech

acquisitions in history.

Dell's $65 billion purchase

of EMC tops the list,

with Nortel's internal buyout

following close behind.

And Fortune Magazine is looking

at a research note from Goldman

Sacks, which predicts

that the price of Bitcoin

could head towards $8,000.

The cryptocurrency has surged more

than sevenfold this year.

And, don't forget, let us know

what you are spotting online.

Use the hashtag BBC-The-Briefing.

That's it for Business

Briefing this hour.

But before we go,

here are the markets.

But before we go,

here are the markets.

We were referring to Asia up, the

All Ordinaries up, and let's focus

on Brent crude, that says down,

though the message is up, very much,

with a sharp jump events in Saudi

Arabia. That's Business Briefing.

with a sharp jump events in Saudi

Arabia. That's Business Briefing.

The Foreign Secretary Boris Johnson

is expected to call his Iranian

counterpart this morning,

after being accused of making

a mistake that could see a British

woman spending five more years

in an Iranian prison.

He's facing calls to retract his

claim to a parliamentary committee

last week that Nazanin

Zaghari-Ratcliffe was training

journalists in Iran

when she was arrested last year,

something her employer

and her family have denied.

Keith Doyle reports.

Nazanin Zaghari-Ratcliffe was

arrested with her baby at Tehran

airport last year. She was charged

with trying to overthrow the

government and sentenced to five

years in jail. She has worked with

Thomson Reuters foundation and the

BBC but insisted this trip was for

her daughter to meet her

grandparents and denies all

allegations against her. Diplomacy

has not helped secure her release

and is comment by the Foreign

Secretary last week has set her case

back according to her family.

She

was simply teaching people

journalism as I understand it.

In

the last few days she was brought

back to court and told Mr Johnson's,

and shed new light on her case and

prove she was not on holiday. It is

feared Iran may now increase the

sentence.

He needs to make a clear

statement that, you know, she wasn't

working training journalists. She

was there on holiday and she was

innocent of the association. And we

have made it very clear for a long

time she is not being held because

of anything she has done. She is

just not.

The Foreign Office says

Boris Johnson will be in touch with

the Iranian Foreign Minister to make

sure that his comments are not

misrepresented.

Coming up at 6am on Breakfast:

Louise Minchin and Dam Walker

will have all the day's news,

business and sport.

They'll also have more on calls

to cut the controversial six-week

wait for Universal Credit,

as demand for foodbanks soars

across the UK.

This is The Briefing from BBC News.

The latest headlines: The latest

revelations from the Paradise

Papers.

The Formula One champion,

Lewis Hamilton, avoided VAT

on a luxury jet he'd

bought, by registering it

in the Isle of Man.

President Trump has arrived

in South Korean capital Seoul

on the second leg of his marathon

11-day tour of Asia.

He's called South Korea's President

Moon Jae-in a fine gentleman,

saying they would work out a way

to deal with the nuclear threat

from North Korea.

The US Air Force says it may have

failed to alert federal authorities

about the violent past of the man

accused of killing 26 people

in a church in Texas.

Devin Kelley was discharged

from the Air Force in 2012

for assaulting his wife and step

son, and legally should not have

been able to own a gun.

The price of oil has surged

past $64 per barrel,

following a crackdown

on corruption in Saudi Arabia.

Now it is time look at the stories

that are making the headlines

in media across the world.

We begin with the South

China Morning Post and US

President Donald Trump,

who says the US will not stand

by if North Korea menaces

America or its allies.

Mr Trump's Asia tour continues,

with the President arriving

in South Korea today.

The Telegraph online carries

comments from US commerce secretary,

Wilbur Ross, who warned the UK not

to let the European Union dictate

what shape Brexit will take

if Britain hopes to get a speedy

US trade deal.

Meanwhile, the Guardian focusses

on another warning from Wilbur Ross,

who said any post-Brexit deal

will hinge on the UK scrapping rules

set by Brussels, including

regulations governing the imports

of chlorinated chicken.

The Arab News looks forward

to Wednesday, and the opening

of the Louvre in Abu Dhabi.

More than a decade in the making,

it will be the first foreign branch

of the Parisian landmark museum,

and will house a permanent

collection of more than 600 artworks

from across the world.

And finally, in the Daily Telegraph

print edition, parents in the UK

have been told to get a grip

and stop keeping their children off

school simply because they

have a cold or a cough.

East Sussex Council say

the new campaign comes

as unauthorised absences

continue to spiral.

So let's begin.

With me is Justin Urquhart-Stewart,

who is director at Seven Investment

Management.

Too complicated.

What would Donald

Trump had to say about you, I

wonder? We look at what the South

China Morning Post is saying about

him with regard to his performance,

if I can use that word, in Japan.

Very hard-hitting stuff with regard

to North Korea.

It is, and the same

types of terminology coming up from

Trump. Now that he is there, will

North Korea reacts? Release and

offer missile, and if that is the

case, will Hebe seemed to take

action straightaway? And what the

Chinese are trying to do, has come

it all down. -- will he be seen to

take action? They need the North

Korean regime controlled as well in

South Korea. They equally don't want

it starting a global war.

And

obviously we will get the

perspective from Seoul, in South

Korea, and the Beijing perspective.

One of the intriguing aspects of

Donald Trump's approach to North

Korea was to tie it immediately to

selling military kit to Japan as

well. It was almost more important.

And you will hear exactly the same

coming out of South Korea as well.

He needs to focus on trade, because

that is something he can try and

force an agreement on. He can't get

anything through taxation at the

moment. In terms of actually

controlling North Korea, he can't do

very much, but if he can come back

with a few trade deals he can say

this was a success.

The message from

the South China Morning Post seemed

to be yes, warm words, but they are

not nudging at the moment.

And

America needs them as well. So yes,

there is a huge trade imbalance, but

America has benefited from this. If

they are observing that relationship

with Japan, it is not a very clever

move.

Looking at matters closer to

home, Wilbur Ross,, Secretary for

the US, happens to be in the UK at

the moment and was speaking at

length yesterday. This is about who

will be in charge of these Brexit

talks. Is it the EU, is it the UK?

And his message is clear enough. If

you want to deal with us, you had

better take charge.

And

interestingly, you see these stories

in the Telegraph as well, saying

don't let them control Brexit. You

will have to scrap all your EU rules

if you want to deal with us. The

wary. America does not do many trade

deals, they do rules whereby it is

our rules or nothing. The idea we

can have a special trade

relationship with America I think is

for the birds.

It is interesting he

makes the point about... We live in

the EU, which is the land of the

single market for us. It doesn't

matter where you go, you are all

trading on the same deals. He says

it looks great but it is

protectionist. And for anyone

outside the EU, especially fewer

sitting in Africa and look at the

EU, this is a huge, great tariff

wall, which looks like a fortress.

That is what it was designed to do.

Create a free market inside. What

they need to do is start reaching

better agreements elsewhere, but it

is taking a very long time to do so.

It is trying to do so with India,

that has taken over 20 years. And to

do so with China will take a long

time. But it will do a deal probably

faster with China than the UK will

be able to do on its own.

We all

love that cause celebre, is

chlorinated chicken out cause

celebre? Both papers have picked up

on it -- our cause celeb. --

celebre.

I suspect we clean our

chicken and all sorts of dubious

chemicals as well, but nonetheless

it sounds dreadful. The American

meat manufacturers have a nasty

habit, especially beef, of putting

all sorts of strange things into it

which are not legal in the EU.

Well,

Michael Gove has said forget it, it

is not happening. Wilbur Ross's

message is you are ignoring the

science, look at the science. It

sounds quite funny, it is a small

niche market, I suppose, but it will

be a serious issue.

And if that is

just chicken, think of all the other

variations as well. The trade deal

with America is a complicated issue

and it is a rather one-sided

argument.

Even if he says it can be

done very quickly, it will not be.

3-on-2 or complicated issue than

chlorinated chicken, the idea of the

Louvre in Abu Dhabi. It will catch a

lot of people by surprise.

I had

forgotten about it completely, but

it must have been coming for about a

decade. Good news for Abu Dhabi,

finding some culture to go and see

in Abu Dhabi. It will be interesting

what they put there and whether it

will be a rotation coming out of the

Louvre in France. This is what the

UAE has to be able to do, find other

reasons to be able to go there. What

you have actually seen, was not just

Abu Dhabi, but their neighbours as

well, it is seen as a nice place to

go to for a break, for a holiday,

but it is not seen as wildly

cultural, so why would you go? And

they are prepared to spend a lot of

money recreating the image, aren't

they? I saw the figures running over

$1 billion deal with France, to be

able to use the Louvre name has cost

them a fortune.

Absolutely, and they

have got the money to do so. And

they have got to invest in their

future, and this is the problem with

UAE. Certain parts of some of the

other emirates have their oil

running out, they are having to

invest in their future. Dubai has

had that issue. UAE is not quite in

that situation yet but developing

for their future, making sure you

are a hub where people want to go to

two, that will be very important.

There seems to be a picture being

painted where it will not just be

the Louvre, they will have a

Guggenheim, viz, that and the other.

The message from the Guggenheim was

they haven't got an arrangement yet.

Merely having a racetrack and the

Louvre is not it. If you can have

yourself as a cultural regional

centre, that will be important and

it changes the sort of people you

are getting there, going back, and

it changes the style, and I think

that is very important.

And has that

started, do you think? Over the

course of the last decade, it is

still not a tourist destination.

It

is hot and sandy, as we know. Are

you actually going to go there for

your holiday? You would probably go

to something like Oman, because they

have a broader range. They need

other reasons to be going to Abu

Dhabi, and that with other

developments may be the start of it.

And we are heading in the winter so

everyone has a sniff or a cough or a

cold. East Sussex Council putting

this on buses, saying get a grip,

stop being soft on your kids if they

have got a call for a cold. Send

them into school anyway, because of

absenteeism. What do you think?

Well, frankly, if a -- as a parent,

if a child has a cold I am happy if

they do go, and don't give it to me!

You don't want them to give the

whole school a bad cold, but frankly

nursemaid in people in this

situation, everybody gets a cold,

you still have to go to school.

Hardluck, live with it. --

nursemaiding.

Are we in a slightly

different culture, we are a little

older?

I suppose the situations when

we would say buckle up, chaps, get

on with it. Time to be a little bit

harder. It is a bit like this issue

in terms of people taking more

risks, risky sports and things like

that. I appreciate no one had health

and safety when we were growing up

but I think possibly a little bit

more toughness would go a long way.

All right, you heard it from Justin.

And it is the question we are asking

on the Briefing today. Your children

may well be saying to you, are you

going to keep them from school or

send them in.

Thanks for watching The Briefing.

From me and the rest

of the team, goodbye.

It would be very good to hear what

you think of the stories we have

been bringing you, not least from

the fine gentleman beside me, and

stay with us on the BBC.