Apple Inc. (AAPL) Passes SEC Inspection Over Tax Strategy
The U.S. government did not find anything illegal with the tax strategies that Apple Inc. (NASDAQ:AAPL) has been using. Four months ago, Apple CEO Tim Cook and other senior staff members faced tough questions by a Senate subcommittee. The U.S. Securities and Exchange Commission wrote a letter to Apple chief financial officer Peter Oppenheimer on September 5th where they said that they would not be taking any action.
The SEC will not be taking action at this time. The U.S., U.K., and European government has been scrutinizing technology companies over the last year. This past May, Apple Inc. (NASDAQ:AAPL) was specifically chosen to stand in front of the U.S. Senate Permanent Subcommittee on Investigations. Apple CEO Tim Cook had to deal with some tough questioning.
Senator Carl Levin (D-Mich.), the chair of the committee, said that Apple was exploiting a tax loophole. Senator Levin said Apple sought the “holy grail of tax avoidance.” Levin claimed that Apple created offshore entities that were holding billions of dollars while claiming to “be tax resident nowhere.”
Apple released a statement saying that they do not use “tax gimmicks.” Apple said that they also paid close to $6 billion in taxes to the U.S. Treasury for the fiscal year of 2012. Apple generates almost two-thirds of their revenues from non-U.S. markets. The vast majority of this amount is kept for local investments. Tim Cook said that the cash would not be repatriated.
In a letter filed in September 5th, the SEC said that they did not find anything wrong with Apple’s tax arrangements. Apple is in the clear for now, but Washington could go after the broader tax arrangements that several technology companies use.