Apple’s dividend move puts spotlight on foreign cash holdings, repatriation tax reform

“At Apple, overseas cash swelled to $64 billion at the end of its most recent fiscal quarter, up 82% from a year earlier. Over the same period, the company’s U.S. cash balance increased 37%, to $33.6 billion,” Maxwell Murphy reports for The Wall Street Journal. “When deciding on its capital allocation plans, Apple CEO Tim Cook said the company focused only on domestic cash because of the taxes associated with repatriating funds from abroad.”

“Most companies pay an effective tax rate lower than that on U.S. profits, because of tax breaks and credits, and are generally unwilling to pay the full rate to bring home income earned overseas. Firms would welcome a tax holiday, but are pushing for permanent reform on the matter,” Murphy reports. “‘Repatriating the cash from offshore would result in significant tax consequences,’ Apple’s Chief Financial Officer Peter Oppenheimer said on a Monday conference call with investors and analysts. ‘We think that the current tax laws provide a considerable economic disincentive to U.S. companies that might otherwise repatriate.'”

Murphy reports, “Before Monday, Apple hadn’t publicly aired its position on the matter, but it is known to be among technology companies who have lobbied for tax relief.”

Read more in the full article here.

Related articles:
Apple: Good start; and what about the overseas cash? – March 19, 2012
Apple’s foreign cash hoard piles up: $54 billion and rapidly growing – January 11, 2012
Senator John McCain eyes Apple’s $54 billion overseas cash pile – November 3, 2011
Google joins Apple in push for U.S. repatriation tax holiday – October 3, 2011
Apple lobbies Obama for tax holiday, wants to bring overseas bounty home – August 24, 2011
U.S Senate Democrat Schumer allies with Apple, other multinationals on repatriation tax talks – June 21, 2011
U.S. companies push for tax break on foreign cash – June 20, 2011
Apple, Oracle, Duke Energy, others organize lobbying blitz for tax holiday – February 17, 2011

9 Comments

  1. At some point, a small country will offer to let Apple relocate to their country with their full massive hoard of cash. There, Apple will build the the world technology hub. Maybe even offer to put Steve Jobs face on their currency, coins and a postal stamp. Not every country is as crazy as our leaders!

  2. There was a repatriation holiday back in 2005. At the time, economists warned that having such a holiday would only encourage companies to hoard cash overseas in the future until they could buy their next repatriation holiday. They also warned that the repatriated money would most likely not be used to expand US operations, but rather would either be distributed as dividends or would actually be used to expand foreign operations.

    The holiday passed, the money wasn’t used as promised, and a few companies even used to repatriated cash to move factories overseas. And, of course, as predicted it just encouraged companies to hold cash overseas in hopes of a new holiday.

    1. Correct, but I’m not sure companies promised anything, certainly nothing on paper. Then again, the US gov’t is not good at getting promises on paper. Of course I’m not so sure what’s wrong with a dividend, the money gets recirculated, as opposed to sitting overseas.

  3. Let me see if I have this right. Apple earns a crapload of money overseas by selling Apple products, made in foreign countries, to people who live in foreign countries. These profits from overseas sales then sit in banks in these foreign countries..

    Yet somehow, the IRS believes that Apple should pay taxes on money they made from overseas sales on products that were produced overseas. Why should the US government be entitled to any of this money?

    Just sayin’

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