“The CEO of Apple, the world’s biggest and richest company, says the notion that his company is avoiding taxes on overseas profits is just ‘political crap’ coming from politicians who refuse to change an antiquated tax code,” CBS News reports. “Charlie Rose conducts a wide-ranging interview with Tim Cook in which the Apple CEO also addresses his company’s other hot-button issues including encryption technology and manufacturing products in China [60 Minutes, Sunday Dec. 20 at 7:30 p.m. ET and 7 p.m. PT].”
“Cook was agitated when reminded by Rose that many in Congress believe Apple is engaged in a scheme to pay little or no taxes on $74 billion in overseas revenue,” CBS News reports. “‘That is total political crap. There is no truth behind it. Apple pays every tax dollar we owe,’ he says. ‘We pay more taxes in this country than anyone,’ he tells Rose.”
“Apple pays more because its makes the most money of any corporation on its ubiquitous products that are best sellers around the world. Two-thirds of Apple’s revenue comes from overseas says Cook. Like most U.S. multinational corporations, Apple keeps that overseas income in foreign subsidiaries, to avoid U.S. taxes,” CBS News reports. “He says he would ‘love to’ repatriate it but he can’t “because it would cost me 40 percent [in taxes] to bring it home. And I don’t think that’s a reasonable thing to do,” he says. “‘This is a tax code, Charlie, that was made for the industrial age, not the digital age. It’s backwards. It’s awful for America. It should have been fixed many years ago. It’s past time to get it done.'”
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Read more in the full article here.
MacDailyNews Take: You tell ’em, Tim!
Under the current U.S. corporate tax system, it would be very expensive to repatriate that cash. Unfortunately, the tax code has not kept up with the digital age. The tax system handicaps American corporations in relation to our foreign competitors who don’t have such constraints on the free flow of capital… Apple has always believed in the simple, not the complex. You can see it in our products and the way we conduct ourselves. It is in this spirit that we recommend a dramatic simplification of the corporate tax code. This reform should be revenue neutral, eliminate all corporate tax expenditures, lower corporate income tax rates and implement a reasonable tax on foreign earnings that allows the free flow of capital back to the U.S. We make this recommendation with our eyes wide open, realizing this would likely increase Apple’s U.S. taxes. But we strongly believe such comprehensive reform would be fair to all taxpayers, would keep America globally competitive and would promote U.S. economic growth. – Apple CEO Tim Cook, May 21, 2013
SEE ALSO:
Apple avoids $59.2 billion U.S. tax bill – October 7, 2015
U.S. companies now have $2.1 trillion overseas to avoid corporate taxes – March 4, 2015
Intel CFO: Obama repatriation tax proposal ‘lipstick on a pig’ – February 4, 2015
U.S. Congress, Obama take Apple CEO Cook’s advice, eye corporate tax changes – February 3, 2015
Obama targets foreign profits with tax proposal, Republicans skeptical – February 2, 2015
Senator Rand Paul finds Democratic partner for tax repatriation holiday – January 30, 2015
Businesses hopeful Republican control of U.S. Congress will break tax-reform gridlock – November 5, 2014
Not in Taxes anymore: On site at Apple’s famous Irish ‘headquarters’ – November 2, 2013
Regan: U.S. tax code spurs loveless foreign corporate ‘marriages’ – May 13, 2014
Ireland to close Apple’s tax loophole, but leave bigger one open – October 15, 2013
G20 think tank OECD proposes blueprint for global crackdown on tax avoidance – July 19, 2013
Thomas Sowell on Apple, corporate taxes, and ‘the road to serfdom’ – May 28, 2013
Taxing Apple just taxes you – May 24, 2013
Don’t tax Apple, tax its shareholders – May 24, 2013
If Apple paid more tax, we might pay less or something – May 22, 2013
Apple CEO Tim Cook pounds another nail into the Keynesian coffin – May 22, 2013
Apple CEO Cook makes no apology for company’s tax strategy – May 22, 2013
Translation:
I am the CEO of a multinational corporation, so national laws should not apply to me. All you guys who represent citizens of one particular nation or another need to stop listening to your constituents and make it possible for me avoid any responsibility to maintain the country where we are incorporated by moving capital wherever I want without any fees or taxes.
That is actually what is going on by ever corporation, including Apple. Yet Apple seems to enjoy all the benefits that the USA provides, since it has headquartered itself in the most expensive regions of the most expensive state of one of the most expensive nations in the world. If you want to reincorporate in Dublin, go ahead, what’s stopping you, Timmy?
What?
Apple has paid every tax dollar legally demanded by the United States as well as the foreign countries they do business in. They’ve paid billions in domestic taxes already. They don’t owe the United States another stinking dime, let alone 40% of their international earnings.
Apple did not move capital overseas, they earned it there. And they paid taxes their.
If they handed over every dime they made to the voracious Federal Government, it would be gone in a week, most of it paying interest on existing debt.
Avoiding responsibility indeed.
Avoiding theft is what they are doing.
Apple pays tax on earnings in the EU through an HQ in Ireland because they were given a sweetheart deal that had them paying corporate taxes at 2.5% instead of 12.5% or more elsewhere in the EU.
Ireland is a member of a club (EU) and if has been found to have broken the rules of the club, then Apple will be required to pay the correct amount. Unfortunately this doesn’t compensate the other EU contries who have lost the tax take from sales in their countries because Apple has been declaring in all in Ireland.
This will only ever be resolved if the Corporate tax paid in a country is only for the goods and services sold into that country. Once that tax has been paid then the residual profit made in that country should be allowed back into the States or wherever Apple wants. That might mean that Apple has to charge more in some EU countries to get the same margin after all taxes but otherwise its just the cost of doing business in a particular country. When the Irish economy tanked the did not seek a bail out from the EU because it would have come with a requirement to equalise their Corporation tax rates with those in Germany and elsewhere – so you can see how much they are making on it ( along with Amazon in Luxemburg etc.). Only if the US /GB/Ger/Jpn and all the big players get together and sort it out will Nations get the mutinationals to pay their dues where they earn their profits.
You and Paul just have to be Democrats. Take from those that make and give to those who vote with you.
I’m not a Democrat – or a Republican for that matter.
The point is that a country sets a tax regime for operating a business that includes the tax take on corporate profits. No one is forced to sell their products in any country and Apple could boycott the whole of the EU if it wanted to. But the reality is that it makes +40% of its profits abroad and they just have to work out what % profit margin, after tax, they want and charge customers accordingly. If its too high, the population will buy them elsewhere. So there are limits on what countries will charge to be competitive – even across the EU.
Max,
Re-read what you just wrote, It makes absolutely no sense. “The point is that a country sets a tax regime”?! Yes they do and Apple follows the laws to the letter. The US doesn’t control what other counties tax laws are. If the corporation does business outside the USoA then it’s none of the US Governments damn business and they have no say in what a company can do outside the USoA. To your point “makes +40%” in other countries. WTF does that have to do with anything you said?
Apple has to operate outside the USoA just like any business. They have to have a business licenses in each country and adhere to the policies of each country. Why would Apple or any corporation not operate a legal business in foreign countries?
So are you are saying if you start a business in the USoA you can’t open a business in a foreign country? Or are you saying you think there should be special taxes just for Apple because they generate more money then the local tavern owner?
I can’t argue with stupid so I’ll just stop there.
I think we are talking about two different, but related issues.
1. Apple has to pay US tax on profits repatriated. That’s for the US government to figure out if the levy is doing more harm than good.
2. Apple is operating in the EU where it is allowed to base its HQ for tax purposes in whichever country it likes. And declare Corporate tax payable at that countries rate – hence the competion between Ireland, Luxemburg and others to offer multinationals special terms ( allegedly). If the case goes against Ireland it will be Apple facing the bill for Accepting in good faith what Ireland offered against the EU rules.
There is also the issue of using Ireland as a base for handling other off-shore funds – and I have no idea who gets to judge on those activities.
Max,
Please show your proof that Apple received a “sweetheart deal”. You can’t because it’s crap and you know it.
Just because someone says something and it’s repeated by idiots enough times, doesn’t make it fact.
It’s not my investigation, and as I said “if has been found to have broken the rules of the club”
However, its worth noting that STARBUCKS was on the receiving end of a lot of bad press when they were called out for paying virtually not corporation tax in UK for the last 15 years – people started voting with their feet ( and went to COSTA coffee shops ). This last year Starbucks paid more tax in the UK than they had done in all the preceeding years put together.
With companies like Apple and Amazon, there is no serious competition and therefore it requires enforcement of fair taxation rules.
Max, Its not a club, its a group of countries that banded together and made some tax rules. If Apple was not following those rules (cheating??) then they would have been in court years ago.
Sadly, many countries in Europe are in dire straights vs income and they see Apple as a quick and cheap way go get free money. They are not even going after Apple at the moment, they are going after Ireland, thinking they can squeeze money out of Apple for past legal actions.
If this passes and Ireland is found to have screwed up and the EU makes Apple pay based upon new rules then no company will ever be safe cause new rules today, mean you have to pay for the new rules, before they were even passed……. Do you know how stupid that sounds!!!
It’s not new rules.
If Ireland offer low tax deals it can be seen as State subsidy by Ireland to attract business and therefore deemed to be against the EU competition rules.
The whole bloody system is crap. Apple, Amazon, et al should be requied to pay Corporation Tax on profits to each member state in respect of the sales and profit made in that state. So Ireland can offer a low tax deal but it only should apply to sales in Ireland and not the vastly greater volume of sales into the UK.
Thelonious, Paul pointed out (crudely) that Apple sucks at tax avoidance. It is headquartered in a very expensive part of the world. So if Apple doesn’t like the law of the land, why doesn’t it move?
You are too religious with Apple.
Taxes are the legal share of the community you sell shit to.
And Apple does not pay taxes like we have to.
Do we need to compensate Apples tax fraud ?
YES we do for too many years now.
Apple needs to payback a little, just to be fair.
And stop tax fraud now. It is made on our backs.
That is the business model against the people.
Don’t deny it.
Paul,
What benefits Apple gets from the USA they pay for in taxes in the US. What benefits they get overseas they pay for overseas.
You need to STFU! You haven’t a clue what you are talking about.
Tim Cook is, correctly, redirecting this to the dysfunctional US Congress. Many years ago, Congress decided that, irrespective of any taxes paid in other jurisdictions, US companies must pay the full tax rate on overseas earnings. They provided a loophole of sorts so that taxes were only levied on repatriated earnings.
This disadvantages US corporations in the international arena if they pay local taxes in the countries in which they operate. It also encourages US corporations to structure their operations to reduce taxes in foreign jurisdictions, thereby creating friction in those countries.
Congress needs to accept that it is being greedy to demand the full tax rate on earnings outside the US and allow US multinationals to credit taxes already paid against US tax assessments. This would align the US with the rest of the world and would encourage US multinationals to be good citizens in their foreign markets and repatriate their earnings.
However, Apple, like many other multinationals, uses various techniques to shift profits to low or no tax countries. This is now under attack worldwide and we can expect most of these tactics to be outlawed as countries claw back the avoided taxes. This is happening to Apple now in Europe and there is also a lot of pressure to address this in other countries, including Australia.
But the repatriation issue is down to Congress.
Right.
But the key point is that tax take in any country should be for goods sold in that country alone.
If a customer buys a phone in London that is shipped from Ireland the tax on profit should be paid at the UK rate not the Irish rate.
Even if every person in Luxemburg bought an iPhone the tax take in Luxemburg would be small becuase there are only 0.5M inhabitants. Same with Monaco, Cayman Islands or Timbucktoo. However there are 65M potential customers in the UK and if Apple wants access to that market it should come at the cost of paying Sales tax (VAT) and Corporate tax on the UK profits.
You need to look up Apple’s financials, because you, like most people have no clue about what you are talking about.
There are 3 groups of US companies. Ones that pay all their taxes on US income and non-US income. To tell you the truth, that’s usually oil companies, but I’d be hard pressed to find any other company that pays full US tax on US and foreign income. You can find those by looking up who is paying 35% or more in taxes. Not too many of those companies.
The second group is the typical US multinational. They pay US tax on US income, and very little US tax on foreign income. Most companies are in this category. Those companies typically pay less than 20% tax on their global income.
Then there’s a 3rd group, which includes Apple. This is also a very small group. This group pays all their US tax on US income. And, they BOOK US tax on most of their non-US income. The bill comes due when the foreign income is brought back to the US. The tax bill is DEFERred not avoided. Avoiding the tax would be to never book the tax. This group books the tax. It’s already taken out of Apple’s earnings. A company like Apple could have a tax rate of 12%, if it did not book US tax on its foreign income. eBay is one such company that books NO US tax on foreign income. Apple books US tax on about 2/3rds of its foreign income. That’s why it’s net effective tax rate is above 26%.
Tax experts like the one the NYTs used to attack Apple, expressed surprise that Apple was booking so much US tax on its foreign income. Yes, look up Martin Sullivan.
Why would a company trying to avoid US tax, be booking US taxes on its foreign income. It totally defeats the purpose of the tax conspiracists.
Thanks for showing your simple mind and utter ignorance on the situation. You go to to the head of the Doofus Class. It’s amazing the amount of rampant stupidity you proudly put on display.
Not to defend Paul, but what’s with your ad hominem???
Why don’t you tell us your recommended tax policy with a little civility?
Fuck you. Apple has a fiduciary duty to their shareholders, and forking over forty percent of their earning to pay for more fucking government is not part of it.
you don’t understand the issue at all do you!
they earn it in another countries it sits in another country where they have to pay any taxes due in those countries they have no reason to bring that money back to the USA as they use it to continue to grown in other countries.
he would love to have a big base for all his money but to bring back money they made outside of the USA will cost them 40% for what? just to put it into a USA Bank Account?
I am not that Paul. This Paul totally disagrees with that Paul.
Paul,
I disagree completely.
Paul.
Damn skippy.
You tell’m Tim.
Totally correct, it should be 0%.
It appears many of you are under the illusion you do not pay these corporate taxes in the price of goods and services purchased from these companies. You do and the complexity and density of the tax code perpetuates an entire industry of lawyers and tax counselors who feed at the trough of minimizing these taxes. PS, you pay for these people as well.
For every amount of profit Apple makes overseas, Apple keeps overseas. For every dollar they make in the US, it stays in the US. Taxes are paid accordingly depending on the country.
It’s not tax evasion.
Corporate taxes here should be 15%
That would bring them back and bring billions and billions back here. The US Gov’t has sold us out – if I could do what US corp’s do, I freakin’ would too.
Corporate taxes should be zero. People pay taxes, corporations only collect taxes. Every penny the government steals from corporate earnings is double taxation.
-jcr
According to the Citizens United decision, corporations are people. And in the US, people pay taxes. Trust me, the corporations far prefer this arrangement than one where their billions would not be allowed to buy the government.
For those who have an axe to grind against Apple, no amount of logic is going to change their minds. Apple is likely following the same taxation rules and loopholes every other large multinational company is following. It’s just Apple’s bad fate to be always singled out as the ONLY company doing something underhanded. Business as usual for Apple shareholders. If Apple had actually been doing something illegally all these years, I’m sure they would have been caught by now. Honestly, I’ve never known any individual who volunteers to pay more taxes than they were supposed to and I figure it goes the same way for corporations. Apple’s accounting books must be open for scrutiny.
If there are people who perceive Apple is an evil company cheating on paying taxes, telling them the truth isn’t going to matter. Might as well just walk away and consider it a lost cause. There must have been plenty of companies in the past who’ve moved most of their business operations overseas, leaving American employees high and dry. Where was all the outrage then?
Tax evasion is illegal, tax avoidance is not.
The point is that the major Nations need to get their collective shit together and agree a common framework for all companies. Its not Apple’s “fault”, its an incoherent global tax policy caused by every government thinking they can get more money by offering variable rates and special deals.
I have never seen a coherent national tax policy and I don’t think I will ever see a coherent global tax policy until the Overlords arrive prior to childhood’s end.
iDon’tDoWindows. That made me laugh.
Max. “Collective shit together”. Blahahahah
Wow, just WOW!
The essence of the problem is the unique way US taxes foreign money. When Apple makes sales and generates revenue in a foreign country, they pay local taxes for all the profits they generated there. If they wanted to take whatever money is left (after paying those taxes) into the US, they would have to pay taxes again, to the US.
Most countries of the world don’t do this. If you made profits overseas and were taxed on those profits, you can bring the money back home and won’t be double-taxed.
The same principle works for Americans living overseas. Even when they pay income tax in the country where they are, Uncle Sam still calls every April and expects to receive part of whatever was left after your host country took their share. The opposite isn’t the case: if you are, for example, a citizen of the UK and live in America, you pay American income tax, but UK leaves you alone, as long as you don’t have any income inside the UK (like renting out your house).
Uncle Sam is one greedy bastard…
Predrag, you nailed it. The entire problem is the the US thinks they are special and thus can tax earning made outside the US whether they be corporate earnings or some US citizen working in a foreign country.
If the US behaved like other countries and only taxed the income made in the US, the problem would mostly disappear. But, as you say, Uncle Sam is one greedy bastard.
It isn’t the character of Uncle Sam, it’s the cockroaches that fill up the Uncle Sam suit (our elected representatives; see Men in Black).
“Like most U.S. multinational corporations, Apple keeps that overseas income in foreign subsidiaries, to avoid U.S. taxes,” CBS News reports.”
Wrong, CBS News! Apple DEFERS US taxes on its foreign income. However, it BOOKS US taxes on about 2/3rds of that foreign income. There are plenty of US companies that do NOT book US tax on its foreign income, but Apple is not one of them. Just look at any US company’s net effective tax rate, if it’s lower than Apple’s 26%, then it’s likely that that US company is booking less US tax on its foreign income. Companies that do that are Google, Microsoft, eBay, etc.
Apple should relocate to Canada 26% vs US 39% .. the following is a short list of companies that have recently relocated. It makes good business sense; manufacturing has moved over seas to lower cost, it makes sense to relocate operations to lower cost. 40 percent is just too high. Why should apple pay for all the fraud and waste of the US government. Progressive country’s like Canada and Ireland government do more with less.
– Burger King
– Bausch and Lomb
– Allergan
– Auxilium
– Liberty Global (Virgin Media)
– Eaton
– Ensco International
– Rowan
– Transocean
– Noble Corp
–
I like it. Except that Apple has decided to relocate to another point off-planet, far beyond the reach of money-grubbing government fingersmiths. That’s why they’re constructing the spaceship. 🚀
No.
The whole point iss that it should not matter where Apple HQ is located. Tax should be paid locally – both sales tax and Corporation tax. That way the country whose population delivers the sales revenue also gets the tax take for their government not some poxy little island state acting as a parasite on the the backs of everyone else.
Wow, so much hot air on this subject!
Apple is legal, but the matter is gray and it needs to be better regulated if nations want to allow small businesses a fair playing field with multinationals.
Obviously the resources of a multinational allows it to seek the most financially desirable financial arrangements. However, there are many aggressive techniques that are, understandably, considered improper, at least in terms of transparent accounting. In some nations, accounting law bans certain practices like Transfer Pricing.
What is Transfer Pricing? It’s where a single product is moved (virtually or physically) between multiple divisions of a single corporate entity into different taxing zones, wherein the “Transfer Price”, that is, the reported cost of the transfer reported to different taxing entities, CHANGES VALUE.
Sometimes this is reasonable; for produce, there is a peak freshness, so the value of the goods depreciates quickly over time. FOR ELECTRONICS, THIS IS BULLSHIT. Apple isn’t a fruit company, so it shouldn’t act like one. Just because MS, HP, Google, and every other large tech company plays the game does not make obscenely rigged internal pricing games to be honest business practice. International law is overdue to require consistent accounting for a single good, and that property should be required to actually change hands.
If you think it’s acceptable for corporations to charge high prices in the USA, then low prices in the 3rd world havens where shell companies are set up, consider this: according to the Bureau of Economic Analysis, there are 6 known tax havens where US corporations squirrel away their funds. These tax havens are parking lots for capital — they are not countries with product distribution, with high product sales, nor large corporate offices. in 1984, US corporations held 2% of profits in those overseas havens. In 2013, the same companies held about 20% of their profits in financial instruments in these havens.
Read up on the “double Irish” method by which Apple, Microsoft, and many others transfer IP via a paper chase of internal licensing deals. No product moves, it’s just a game where things like advertising rights are transferred from Alphabet in the USA to Google Ireland Limited at obscene rates unlike anything in the legitimate advertising industry.
Have you ever seen an advertisement for Google products that was produced by Google Ireland? Me neither.
Just because Apple does the same shenanigans does not make it right. The law needs to be fixed, and these dishonorable business practices need to be ended once and for all.
40 percent AFTER they already paid the local tax overseas.
*DING* Exactly. The mind boggles.
Much as I am annoyed by corporatocracy abusing citizens of the USA, Tim Cook has this EXACTLY right. Paying the full corporate tax on foreign made profits is beyond stupid. We can point directly at right at Senator Carl Levin as the core moron behind this abuse of corporations by #MyWillfullyStupidGovernment.
Man, the congress writes the Tax Code. If there are loop holes it is because some lobbyist paid good money to have it there.