Apple has eight years to pay $38 billion U.S. tax bill – with no interest or penalties

“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

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  1. “MacDailyNews Take: According to the Tax Cuts and Jobs Act”

    The GOP love calling tax cuts a job creator. However they never find any data to support their beliefs. Just look at the Bush tax cuts – it did nothing for the economy. Extending these cuts, then making some of these tax cuts permanent did nothing for the economy under the Obama administration.

    1. That would be fiscally irresponsible. If the law gives you a deferment, you would be in gross violation of your fiduciary responsibility if you were to relinquish all that money right away. Bringing it back and using it in furtherance of business would the the most logical course.

      1. of course, on the other hand one can argue that the u.s. govt. might be in gross violation of their fiduciary responsibility to the american public when they allow those corporations to pay their bill in inflated dollars over that length of time. – sans interest

        just another sweet heart deal by politicians for american corporations that already have the requisite funds, stashed overseas, to pay the balance due immediately.

        it is a courtesy one does not find extended to middle class taxpayers, when they owe uncle sam a big wad go dough. we get penalties and interest charges thrown in.

  2. A liberal company like Apple would send the check at the earliest opportunity, to provide for the welfare of the people, help pay for the entitlement programs.

    What are you waiting for Tim Cook? Pay Apple’s FAIR SHARE now!

    1. Exactly what makes you think Apple is a “liberal company”? They may be very active when it comes to social responsibility, but as a company, in their financial dealings, they have been quite conservative (as most large companies are, by necessity).

  3. As a shareholder I would sue Apple if they paid the tax faster than required as they should be earning interest on it until the last possible moment they are required to pay.

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