“The Republican tax bill now awaiting President Trump’s signature has two major pieces of good news for America’s most valuable company, Apple: It cuts the corporate income tax to 21 percent, and creates a cash repatriation holiday, allowing the company to bring tens of billions of dollars stashed overseas back into the U.S. under a lower rate,” Luke Stangel reports for The Silicon Valley Business Journal.

“But a key provision in the tax bill challenges Apple’s longstanding practice of holding intellectual property in foreign subsidiaries, a decision the company has relied on for decades to reduce its overall corporate tax rate,” Stangel reports. “And, it appears Republicans didn’t design an easy way for Apple to transfer that intellectual property back to Cupertino.”

MacDailyNews Note: See: Apple notches big league win with U.S. Republican tax cuts, but faces snag with taxes on foreign patents – December 21, 2017

“For years, Apple CEO Tim Cook has lobbied federal lawmakers to reduce taxes across the board, particularly on the more than $250 billion in cash the company holds in its foreign subsidiaries. Under the Republican tax plan, Apple would pay a one-time tax of 15.5 percent to repatriate its cash reserves. After that, companies would pay taxes of at least 10.5 percent on repatriated cash, but would be able to deduct foreign taxes already paid on the money, effectively lowering the repatriation rate to zero,” Stangel reports. “Going forward, reducing the national corporate tax rate from 35 percent to 21 percent will also help Apple’s bottom line.”

MacDailyNews Note:

Apple CEO Tim Cook and U.S. President Donald Trump at tech summit in June

Apple CEO Tim Cook and U.S. President Donald Trump at tech summit in June

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

Read more in the full article here.

MacDailyNews Take: There needs to be a way for companies to bring internationally-held patents back into the U.S. without exorbitant taxation, if lawmakers desire to disincentivize companies from holding patents overseas.

Apple notches big league win with U.S. Republican tax cuts, but faces snag with taxes on foreign patents – December 21, 2017
Congressional Republicans deliver epic overhaul of U.S. tax laws to President Donald Trump – December 20, 2017
Republican-controlled U.S. Congress poised to approve biggest tax system overhaul in 30 years – December 19, 2017
GOP tax cut plan sets 15.5% repatriation rate on offshore cash; 8% if invested in plants and equipment – December 16, 2017
GOP eyes taking bigger bite from Apple, others holding cash overseas to seal President Trump’s tax cuts – December 15, 2017
Apple could be biggest beneficiary of Republican tax reform plans, saving at least $47 billion – December 6, 2017
Dow soars 203 points higher to record as Wall Street cheers U.S. Senate passage of major tax bill – December 4, 2017
Oracle joins Apple in support of President Trump’s tax repatriation plan – November 7, 2017
President Trump’s tax cuts could be YUGE for Apple – September 28, 2017
GOP tax plan calls for cutting the corporate tax rate from 35 percent to 20 percent – September 27, 2017
Goldman Sachs sees $1 trillion in U.S. tax cuts coming – September 20, 2017
Apple will eventually bring billions of dollars back to the U.S. under President Trump’s tax reform plan – July 21, 2017
President Trump’s tax reform plan includes deep cuts in corporate taxes – April 26, 2017
Apple could be primed for profit explosion under President Trump’s big tax cut – April 26, 2017