“The eye-popping $38 billion tax bill that Apple Inc. said it plans to pay on its mammoth pile of accumulated foreign earnings will probably hit federal coffers in an eight-year trickle, not a one-time torrent,” Lynnley Browning reports for Bloomberg. “The special, cut-rate “repatriation” tax that Congress imposed on multinationals like Apple gives them as long as eight years to pay the new levy — with no interest or penalties.”

“That drawn-out schedule puts the biggest bills off until later years, meaning Apple’s first repatriation payment would probably be much closer to $3 billion, according to tax experts,” Browning reports. “U.S. multinationals are estimated to have $3.1 trillion in total untaxed overseas earnings, held as both cash and illiquid assets. Apple has the largest offshore cash pile, with about $252 billion as of the end of September, the most recent tally available.”

“In passing the most extensive tax-code rewrite since 1986 — a bill that cut the corporate tax rate to 21 percent from 35 percent — Congress scrapped the previous international tax system for corporations. The old system included an unusual provision that allowed companies to defer U.S. income taxes on foreign earnings until they returned the income to the U.S. That ‘deferral’ provision led companies to shift earnings overseas and stockpile profits in low- and no-tax havens,” Browning reports. “Going forward under the new tax system, companies will generally only be taxed on their domestic profits, not dividends from their foreign subsidiaries — though the bill included safety nets intended to capture certain foreign income and payments pegged to subsidiaries in low-tax countries like Ireland and no-tax countries like Bermuda.”

Read more in the full article here.

MacDailyNews Take: According to the Tax Cuts and Jobs Act, Apple’s $38 billion tax bill can be paid as follows: 8% in 2018-2022, 15% in 2023, 20% in 2024, and 25% in 2025.

The importance of the U.S. finally moving to a territorial system cannot be overstated.MacDailyNews, December 19, 2017

SEE ALSO:
Why a record $38 billion U.S. tax payment is a good deal for Apple – January 18, 2018
‘We want to help America,’ Apple CEO Tim Cook says of moving foreign money back to the U.S. – January 18, 2018
Apple to build new U.S. campus, pay record $38 billion repatriation tax – January 18, 2018
Apple gives employees $2,500 bonuses after President Trump signed the GOP’s Tax Cuts and Jobs Act – January 17, 2018
Looks like Apple is bringing nearly all of its $250 billion foreign cash back home to America – January 17, 2018
Apple plans to add $350 billion to U.S. economy and create over 20,000 new jobs over next 5 years, pay $38 billion in repatriated taxes, the largest ever made – January 17, 2018
Stock market optimism from pros reaches highest level in nearly 32 years – January 17, 2018