“Multinationals are in line for a windfall from President Donald Trump’s call to cut the tax rate on U.S. companies’ stockpiled overseas earnings, but a select few would do better than others,” Lynnley Browning reports for Bloomberg. “Apple Inc. and Pfizer Inc. may enjoy an extra earnings bump because of their previous accounting maneuvers, while companies including Microsoft Corp., Merck & Co. Inc. and Exxon Mobil Corp. might have to log a one-time earnings hit, data recorded in their public filings suggest. The difference, which could mean a bookkeeping boost of as much as $7.9 billion for Apple and $5.3 billion for Pfizer, can be found on both companies’ balance sheets. Both have created multibillion-dollar ‘deferred tax liabilities’ to reflect the U.S. taxes they expect to owe on their accumulated offshore income.”
“Those liabilities are based on the current U.S. corporate income tax rate of 35 percent — but Trump and congressional Republicans have proposed slashing the rate on accumulated foreign earnings to just 10 percent or lower,” Browning reports. “If they succeed, Apple and Pfizer would be able to pay their lower-than-anticipated tax bills and then adjust their balance sheets, with one-time additions to their earnings worth billions, tax experts say.”
“A few companies choose not to label large amounts of their offshore earnings as permanently reinvested because they may need to tap that money in the future. In such cases, they have to book a deferred tax liability — as Apple and Pfizer have. The strategy that both companies used ‘now looks prescient,’ said Robert Willens, a tax and accounting expert in New York. ‘These companies, unlike most other multinationals, will see substantial benefits from the enactment of a deemed repatriation tax rule,'” Browning reports. “Apple Chief Executive Officer Tim Cook said during an exclusive interview with Bloomberg Television last week that he supports the deemed-repatriation approach…”
Read more in the full article here.
MacDailyNews Take: Those who say Apple lacks a visionary have failed to account for CFO Luca Maestri.
SEE ALSO:
U.S. companies push Trump administration hard for lower tax rate on offshore profits – May 15, 2017
The fact that Apple has to issue bonds is a reminder of why urgent U.S. tax reform is needed – May 12, 2017
Apple borrows billions while sitting on massive overseas cash mountain – May 10, 2017
Why Apple is investing $148 billion in corporate debt – May 4, 2017
President Trump’s tax reform plan includes deep cuts in corporate taxes – April 26, 2017
Apple raises $10 billion in debt ahead of President Trump’s repatriation tax plans – February 3, 2017
After Apple’s blowout earnings, the Street looks toward ‘iPhone X’ and President Trump’s tax reforms – February 3, 2017
President-elect Trump’s corporate tax reform expected to have some positive impact on Apple EPS – January 14, 2017
Apple has now amassed nearly $80 billion in debt – September 12, 2016
If the tax reforms took place imminence, the banks would rush back into AAPL which help AAPL pushing uptrends from current 7% downgrades.
Booking the US tax on foreign income is what you’re supposed to do, like Apple and Pfizer, unless you honestly think you’ll never bring it back to the US. Clearly, those other companies that didn’t book enough US tax on foreign income, essentially every other big company, will now be hypocrites, when they do bring that foreign income back, after having told the US Treasury for years that they wouldn’t.
Anything that helps Apple is a good thing.
Tim Cook will thank Donal Trump. Hell, Cook may even send flowers.
Maestri started at Apple in 2013 and became CFO in 2014. Apple was using “deferred tax liability” accounting long before he arrived. I think he’s great, but in this area he just continued with Oppenheimer’s plan.
This is actually something they SHOULD agree on. The only question is why hasn’t this been done already?
Do not know when this good news implemented, but let’s hope it will happen rather sooner than later. At some points, the repatriation must be made, money can’t sit overseas forever collecting dust. While the government needs money for infrastructures.
https://www.bloomberg.com/news/videos/2017-06-12/the-winners-of-trump-s-offshore-tax-plan-video
The word Trump was used and only 7 comments? Is everyone coming to their senses?
heh.
Persecution complex? It’s all about yer boy? You’re the only ones who know what’s right? Anyone who disagrees with you is wrong?
No wonder people despise and dislike you.
Actually people don’t.
A scathing Indictment of The Plantation Party:
In his autobiography, Clarence Thomas tells about debating issues with a neighbor in law school, John Bolton. At the time, Thomas was a liberal, even describing himself as a radical. Bolton asked him “Clarence, as member of a group that has been treated shabbily by the majority in this country, why would you want to give the government more power over your personal life?” Then in the book, Thomas reflects: ‘That stopped me cold. I thought of what Daddy had said when I asked him why he’d never gone on public assistance. “Because it takes away your manhood,” he said. “You do that and they can ask you questions about your life that are none of their business. They can come into your house when they want to, and they can tell you who can come and go in your house.” Daddy and John, I saw, were making the same point: real freedom meant independence from government intrusion, which in turn meant that you had to take responsibility for your own decisions. When the government assumes that responsibility, it takes away your freedom – and wasn’t freedom the very thing for which Blacks in America were fighting?’
Jerk of the world: Turkey, idiot, pain in the ass.
Trump says,”Make Apple great again.”
Reality check = highly unlikely to happen at 10%. Maybe 15 or 20, but 10%? Nope. Should be, but political realities won’t let. Trump has lost control of legislative initiatives and will not get it back. He is quickly becoming a political liability in the swing states and nothing scares congressmen like a whiff if losing their jobs. Luckily for them, the democrats exist.
Even if this were true, it would basically be due to the efforts of his opposition to essentially fuck up the government so that no none could possibly undue all their sneaky bullshit. Follow the money.
Apple should demonstrate their moral authority and refuse any tax relief passed by Repulican dominate Congress and signed by Donald Trump. Nothing, and I mean nothing, speaks louder than a natural librard acting out their ideology proudly and publicly. Taxes belong to the government and every citizen should do their patriotic duty and pay and pay and pay.