Apple Paid 1.9% Income Tax On $36.8 Billion In 2012 Earnings Outside The U.S.
Everybody always jokes around how wealthy people and big corporations “transfers money to the Cayman Islands” to avoid paying large taxes. However companies are finding ways to avoid paying massive taxes outside of the U.S. and it is a serious issue. For example, Apple only paid an income tax rate of 1.9% on their earnings outside of the U.S. in the latest fiscal year according to a regulatory filing. Apple paid $713 million in taxes on foreign earnings of $36.8 billion in the fiscal year ended September 29th according to the financial documents filed on October 31st.
Foreign earnings are up 53% from fiscal 2011. Apple earned $24 billion outside the U.S. and had paid income tax of 2.5% on it. In the United States, the corporate tax rate is 35%. Apple is able to side-step paying income taxes on its profits to the countries that they sell products by using several accounting moves like the Double Irish With A Dutch Sandwich move.
Apple keeps a lot of their cash reserves overseas and if it was brought into the United States, they would have to pay taxes on it. The cash that Apple has overseas as of September 29th is $82.6 billion, which is up from $74 billion on June 30th.
Apple sets aside a portion of the foreign profits and it marks them as a subject to U.S. taxes later in the future. When Apple reports their quarterly earnings, they record that portion of the taxes as a liability that is subtracted from profits even though they have not actually paid taxes on it.
If Apple removed the “phantom” tax obligations from their bottom line, their profit would be boosted by as much as $10.5 billion for the last three years according to tax experts.@amitchowdhry or on Google+ at +AmitChowdhry