Legal Aspects of International Trade: Apple Pty Ltd in Australia

This report provides a comprehensive analysis of the legal aspects of Apple Pty Ltd's operations in Australia. It begins with an executive summary and introduction, then delves into the impact of Australian company tax law on Apple, including its obligations to pay taxes and comply with tax regulations, particularly concerning transfer pricing and profit shifting. The report also examines Australian copyright law, the Australian Consumer Act 2002, and Australian labor law, highlighting Apple's responsibilities in these areas. Furthermore, it explores the influence of the WIPO and WCT treaties on Apple's digital products, including the rights of reproduction and on-demand networks. Finally, it addresses bilateral tax treaties and their relevance to Apple's international operations, offering insights into the legal complexities of a multinational corporation operating in Australia. The report emphasizes the importance of compliance with various legal frameworks and the implications for Apple's business practices.

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LEGAL ASPECT OF INTERNATIONAL TRADE AND ENTERPRISE
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Executive summary
Apart from being an organisation which has revolutionalised the world of
technology , Apple has been recognised as a Multinational company with difference. Its
achievements have left many fascinated for many years. Most of the organisations in the
technology industry focus on one to two sectors, but apple is involved in multiple areas. The
company not only manufactures its own hardware but also its own operating system.
Conventional wisdom would suggest that apple is doing everything right by keeping
itself close to various ventures within the technology industry.

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Table of Contents
I. Executive Summary...................................................................................................2
II. Introduction................................................................................................................4
III. The impact of Company Tax law on Apple Pty Ltd. ............................................4-6
IV. Copyright law of Australia.....................................................................................6-7
V. Australian Consumer Act 2002.................................................................................7
VI. Australian Labour Law..........................................................................................7-8
VII. The WIPO and WCT Treaties...................................................................................8
VIII. Rights applicable to on-demand networks...........................................................9-10
IX. Bilateral Tax Treaties........................................................................................10-11

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Introduction
Apple Pty Limited is a foreign, private organisation that derives most
of its revenues from the supply of mobile communication and media
devices, Laptops, computers and lastly, a variety of portable digital music
players (Hely, 2010). Apple Pty Limited also retails various software
products, services and accessories, networking solutions and third-party
digital products. The company has approximately 4,000 staff across
Australia and New Zealand and is managed from it’s headquarter located
in Sidney, New South Wales. In addition, the company is a wholly owned
subsidiary if the United States consumer electronics giant, Apple Inc
(Taylor, & Richardson, 2012).Therefore, Apple Pty Limited is only responsible
for importing and supplying apple branded consumer electronic software.
The company has a number of outlets situated in New South Wales, South
Australia, Canberra, Queensland, Victoria and Western Australia, while its
global headquarters are located in Cupertino, California, United States
(Chen, & Bouvain, 2009). In addition, the company also retails medial content
including games, mobile applications as well as film and television
programs through the ITunes Store.
The impact of Company Tax law on Apple Pty Ltd.
Every company In Australia has the obligation of paying its taxes,
and as a Multinational corporation, Apple Pty Limited is obliged to pay all
the taxes it owes, not only Australia but every country in which it

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operates. This is to ensure that it complies with the tax rules and
regulation of the countries and communities where it does its business.
It is important to note that the changes that were done on the
company’s structure back in 2015, were precisely designed to preserve its
tax payments not only the United States but also other countries where it
operates. Far from being one of the biggest taxpayers in Australia , it is
obliged to pay a 10% rate of its investment income .In addition to that ,
the law requires the company to pay more abbe its taxes , in property
tax , payroll tax and VAT. This would ensure that the company makes its
full economic contributions.
Under the current Company law tax system, the company revenues
are taxed based on where the value is created. The taxes Apple pty pays
to Australia are based on this principle. The biggest value in the
company’s products is indisputably created on mobile communication
devices, where most of the design, engineering and development is
conducted (Freedman, 2009).
When Australia implemented in corporate tax reforms back in 2015,
apple pty limited and other multinational companies were obliged to
comply with the new rules, requiring the company to inform the
government in case it decides of changing the residency of its subsidiaries
in New Zealand. Notably, the new corporate tax requires to be paid fairly
across the countries that the company operates. Therefore, Apple has to
follow the law, and if the Act is changed, it ought to comply. Under the

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Corporate tax act, Apple Pty Limited will need to provide the
commissioner of taxation with details in the general transfer prices, global
allocation of income and all the economic activities of the company.
Information about any transactions between the Australian-based
subsidiaries and its related overseas enterprises, along with the sum
transferred. This should be accompanied by the company’s explanation
for its determination of transfer amount.
The minimum penalty if the company is found to have been involved
in a tax evasion scheme, the amount owed in taxes will be 120% of the
initial total taxes. Moreover, if the company is found guilty of profit-
shifting schemes, it will attract a 60% penalty. Such punitive actions are
reduced if the company discloses its actions prior to or during auditing, or
if its actions are “reasonably arguable.” This implies that Apple‘s
development in technology in intangible goods such as intellectual
property has to be observed carefully. Much of the value of the company’s
revenue lies not in its tangible products but in its software, applications,
music among others. This is in consideration of the fact that, unlike
tangible assets. Intangible assets like intellectual property can easily be
moved between countries (Dinwoodie, & Dreyfuss, 2009). The fact that its
mobility and the difficulty to value means that it can be used to funnel
more revenues from high tax to low tax countries , exploiting the
loopholes in the corporate tax acts along the way.
The potential cooperation-based resolution would involve Australian
government, working together with other countries and agree to tax Apple

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Pty Limited on its profits based on a fair international formula. This would
ensure that any tax havens are closed, particularly where little to no
constructive economic corporate activities are taking place. This is often
called, “unitary tax” and would be required by Apple Pty Limited in today's
global economy. If the company embraces this system, its global profits
would be treated as one huge fraction that would be divided based on the
investment income between the countries in which it operates. However,
given the existing nature of international law, it allows a system that in
tax competition. This, in turn, benefits MNCs such as Apple Pty Limited
that might be seeking to exploit such opportunities (Taylor, & Richardson,
2012).
Copyright law of Australia
In the past years, the number of substantive norms that
international treaties impose on member states has considerably
increased over the years. Therefore , it is appropriate to consider the
extent to which such instruments have impacted the Apple Pty Limited as
well as to in to inquire what role the Australian laws do have in an era not
only of international copyright norms but of international dissemination of
copyrighted products.
The deficiencies of Australia’s copyright regime reflects not an
oversite on certain companies, but instead a specific reality of the
international era significantly devoid of institutional laws that would
ensure there are no infringements. Today , the impact of the TRIPs

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agreement , WIPO (World Intellectual Property Organization) Copyright
treaty 11(WCT) and a series of Free trade agreement (FTA) have provided
extensive layers for Apple Pty Ltd with a protective expression on an
increasingly similar legal foundation (Yu, 2009).
Australian Consumer Act 2002
Apple relies on a positive public image for its brand. As a result ,
the company has developed a code of conduct in accordance with
Consumer Act 2002 and publicised its efforts to comply with the law.
The fundamental issues that needs to be understood here is that
Apple should not make it publicly seen as if they are compliant with
consumer protect law while in reality they are not setting the
standards. The approach of applying consumer laws in developing
internal codes of conducts depends on growing interest by
consumers in ensuring the company’s accountability and compliance
with consumer protection obligations . Without those rules , internal
code of conduct would only be a means of ensuring there is
compliance and the proper way of enforcing such compliance
would be important (Sauvant, & Sachs, 2009).
Given that Apple has devoted itself to observe all consumer protection laws in
Australia, it now requires to integrate the UNGP agreements in order to ensure that its
workforce observe the laws accordingly. This will assist in ensuring that Apple Pty Limited
has a positive coordination with other major companies, for the benefit of the consumers.
This would necessitate the corporation to implement a more consumer-centred approach, in

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which the whole enterprise identify its fundamental priorities across the country and work on
improving its value and safety mechanisms. It all starts with the company.
Australian Labour Law
It is often assumed that multinational companies will to some
extent adapt to the practices of their host country as well as their
legal environment. However recent studies show that the adaptation
process is often complex and requires a set of rules that these
companies should follow. Labour law provides a good illustration for
Apple company regarding the interplay between the key local actors
and the institutions and the workers . The company is obliged to
comply with the labor laws in order to ensure that all employees
receive fair pay and also working is safe environments (Rego, &
Wilson, 2012).Apple and other MNCs that operate within the Australian jurisdiction are
bound to these rules. A majority of MNCs in Australia have articulated their full pledge to the
standards set by the labor laws on a voluntary basis. In the past few years Apple has been part
of numerous initiatives that have been envisioned to develop frameworks for organisations
based on such laws and conventions
The WIPO and WCT Treaties
The WIPO treaty directly responds to Apple’s “digital agenda” in its
provisions dealing with the application of reproduction rights and the
storage of intellectual property in its digital systems. Moreover, the treaty
provides the limitations as well as exceptions that are applicable to the
various environments in which Apple operates in Australia.

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The WIPO and WCT provide for the right to reproduce software and
other digital properties by incorporating reference to article 9 of
Australia’s Intellectual property Act. The scope of the rights of
reproduction in Australia’s digital environment is an issue that has
attracted extensive controversy among Multinational companies. This is
because ,the Australia’s law and complex WIPO treaty makes it hard for
the major technology companies like Apple Pty Limited to take legal
actions against its competitors such as Huawei’s decision together with
the Chinese government to drop the company’s products from its list of
state procurement products (de Beer, 2009). When Beijing joined the WIPO
treaty back in 2001, the state didn’t sign up for the joint Plurilateral treaty
on government procurements. Therefore, China had the ability to
eliminate any foreign brand the government does not like from its list if
procurements with very little potential for blowback from the WTO.The
reality is that foreign countries and member of the treaty such as China
have been trying to find ways of replacing foreign produced information
and communication products with domestically duplicated ones with the
support of indigenous innovation government policies which was
established in early 2009 (Richardson, Taylor, & Lanis, 2015).
Rights applicable to on-demand networks
This is perhaps one of the best contributions of the WIPO and WCT
to apple Company .The best this is their recognition of the rights of the
producers to authorise any cross-border transactions of their work. Thus
Australia’s Apple Pty limited has the right under these treaties to

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authorise or reject the supply of their products beyond the Australian
border (Dodgson, et al., 2011).
The treaty attempts to meet its broader objectives by regulating the
procedural and substantive requirements under which states might
impose restrictions on digital products. The first step in the regulatory
procedure, the state exporting digital products should first notify the
importing country of its intentions. This includes a list of the details of the
products, the intended use and measure that have been taken to ensure
biosafety and environmental protection (Hely, 2010).The importing
company/state must later acknowledge the notification and proceed to
evaluate the risk assessment procedures. Notably, Apple Pty Limited has
been applying this protocol as a way of ensuring that its product is safe
for use by consumers.
Annex III of the treaty ensures that risk assessment procedure on all
products are safe, with an opportunity for Apple Pty Limited to establish
its own procedure that ensures they meet their own quality standards.
Following the risk assessment, Apple Pty Limited might decide to
authorise the importation of digital products, to restrict the importation
altogether or allow the importations to be made under certain
circumstances. This provision has been controversial particularly in
Australia because it seemingly allows a company to restrict trade even
when it is a subsidiary of a multinational company. Lal Joshi, & Gao, (2009)
even suggests that this clause of the treaty allows a company to adopt
“zero tolerance policy” restricting the importation of all digital products.

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The Preambular language used in the WCT agreements demonstrates
goals similar to the WIPO agreements. While the WCT recognises that
Apple Pty Limited should not be prohibited from enforcing the necessary
measure to protect its domestic consumers, the WIPO treats mostly
concerns itself with the negative impact on trade and way of accessing
market (Mallin, & Finkle, 2011).
Bilateral Tax Treaties
The role of bilateral tax treaties attracts a lot of attention from most
countries around the world. Even through bilateral tax treaties are used to
avoid double taxation, it appears that multinational corporations use the
network of these treaties as a way of avoiding taxes .Most companies
achieve this by establishing shell companies in states that have attractive
treaties, commonly known as treaty shopping (Blonigen, Oldenski, & Sly,
2014).Maintaining a low corporate tax and attracting more direct
investment are the fundamental aspects of Australia’s economic policy.
Australia’s industrial policy can be summarised as one that constantly
focuses on retaining foreign direct taxes and a competitive tax strategy
and a fundamental tenet of that policy. In particular, Apple Pty Limited is
obliged to pay its taxes based on the foreign direct investment framework
(FDI) (Faeth, 2009).
An industrial policy for Apple pty limited is entirely dependent on tax
incentives that need to be developed and implemented. Balanced growth
requires more emphasis on both local and multinational corporations

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within Australia (Khan, Alam, & Alam, 2015). Here, Apple has a great
opportunity as the valuation of the products would be based on a
balanced growth framework and taxation will be based on where the
value is created most.

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