Apple Paid Just 2 Percent In Corporate Taxes Outside Of The US
redOrbit Staff & Wire Reports – Your Universe Online
Despite being the most valuable company in the world, Apple paid an income tax rate of less than 2% on international earnings over the latest fiscal year, various media outlets reported on Sunday.
According to the Associated Press (AP), a financial statement filed on October 31 revealed that the iPad and iPhone manufacturer paid $713 million in taxes on non-US earning of $36.8 billion during the fiscal year that ended on September 29.
The previous year, the Cupertino, California-based company paid a foreign tax rate of 2.5%, according to BBC News.
In comparison, CNET‘s Roger Cheng said that the corporate tax rate in America is 35%, and that Apple paid $12.26 billion in federal taxes and $1.06 billion in state taxes on profits earned in the US.
“What Apple is paying overseas isn’t illegal, and the company isn’t even using any tax loopholes in avoiding paying higher taxes,” Cheng explained. “But there have been increasing calls for large technology companies that do have a presence overseas to pay a higher share of taxes.”
“For Apple, foreign profits are an increasingly important stream as the U.S. market begins to mature,” he added. “While demand for Apple products remains high here, there are few willing consumers who don’t already own an Apple product, dampening its growth prospects down the line. As a result, emerging markets such as China and India are seen as the drivers of Apple’s future profits“¦ [and] it doesn’t hurt that the tax rates are lower over there either.”
BBC News said that much of Apple’s European business is run through a subsidiary located in the Republic of Ireland, which has a 12.5% corporation tax. Britain, on the other hand, charges nearly double that (24%).
“Like other big companies, Apple leaves cash overseas,” the AP said. “If it brought it home to the U.S., it would have to pay U.S. corporate taxes on the money. The cash that Apple has left overseas as of Sept. 29 has mounted to a stunning $82.6 billion, up from $74 billion as of June 30.”
“Where Apple does differ from other companies is that it sets aside a portion of the foreign profits, marking them as subject to U.S. taxes sometime in the future,” the wire service added. “When Apple reports quarterly results, it records that portion of the taxes as a liability, which is subtracted from its profits even though it hasn’t actually paid the taxes.”
Tax experts told the AP that Apple could “easily” do away with these “phantom” tax obligations, which would boost the company’s total profits over the past three years by upwards of more than $10 billion. Overall, they reported a net income of $41.7 billion ($44.15 per share), an increase of 61% over fiscal year 2011.