Apple Taxes

Apple has gained beliefs that every company has a responsibility to pay its taxes, and as one of the largest taxpayer in the world, Apple pays every dollar it owes in every country around the world. Their economic contributions that are made to the country and communities where they do business is highly respected.

The facts that are being presented are based off the reports by the International Consortium of Investigative Journalists. The tops addressed are:

- Changes Apple made to corporate structure in 2015 that were specifically designed to preserve its tax payments to the United States and to not reduce its taxes anywhere else. No operations or investments were moved from Ireland

-  Apple pays billions of dollars in taxes to the US at a statutory 35% percent rate on investment income from its overseas cash.

- Apple’s effective tax rate on foreign earnings is 21 % - A figure easily calculated from public filings. This rate has been consistent for many years.

About Apple’s Tax Payments:

Apple has been known throughout history to design new products and create new industries by increasing and focusing on innovation. Their hard work and loyalty has ultimately led to the creation of revolutionary products and services that have effected and improved people’s lives and allowed for the creation of millions of jobs around the world.

The taxes for multinational companies are not as simple as they seem, yet a fundamental principle is recognized around the world: A company’s profits are taxed based on where value is created. This principle is agreed on by the Organisation for Economic Co-operation and Development, Ireland, United States and other.

Apple is the largest taxpayer in the world. They pay over $35 billion in corporate income taxes in the last 3 years and they pay taxes in every country where they sell products at. When an Apple product is purchased outside of the United States, the profit is first taxes in the country where the sales takes place, then Apple pays taxes to Ireland, where Apple sales and distribution activity is executed by some of the 6,000 employees working there. The additional taxes is then paid in the United States when the earnings are repatriated.

Apple’s worldwide effective tax rate is 24.6%, which is higher than the average for United States multinationals.

The majority of the value in Apple products are created in the United States. This is where they design, develop and engineer their products. Under the current international tax system, the majority of Apple taxes are owed to the United States.

Apple has cash overseas because that is where it sells the majority of its products. Under the current tax system, post tax earnings from foreign sales are subject to United States tac. To cover United States deferred taxes, Apple has earmarked over $36 billion. This is along with the $35 Billion the company has paid in corporate income taxes over the past three years.

In 1980 Steve Jobs was looking for a base to expand outside the United States and choose Ireland, in which Apple has been operating in since. The facility located in Cork, Ireland had started with 60 employees and has increased to now over 6,000. Apple’s innovation and investment supports a further 12,000 jobs all across Ireland. In Europe, Apple supports more than 1.5 million jobs.

Apple had decided to make changes to its corporate structure to comply with Ireland’s changes to its tax laws in 2015. Ever since, all of Apple’s Irish operations have been taking place through Irish resident companies. Apple pays tax at Ireland’s statutory 12.5%.

Included in these changes, Apple’s subsidiary that holds overseas cash had became resident in the United Kingdom Crown dependency of Jersey, specifically to ensure that tax obligations and payments to the United States were not reduced. Ever since, Apple has paid billions of dollars in United States tax on the investment income of this subsidiary. There were no benefits for Apple in regards to taxes from this change and had not reduced Apple’s tax payments or tax liability in any country.

Apple believes comprehensive international tax reform is essential, and for many years has been advocating for simplification of the tax code. Reform that allows a free flow of capital will accelerate economic growth and support job creation. A coordinated legislative effort internationally will remove the current tug of war between countries over tax payments and ensure certainty of law for taxpayers.

Keywords:

Taxpayer: A person who pays taxes.

Communities: A group of people living in the same place or having a particular characteristic in common.

Corporate Structure: Consists of various departments that contribute to the company's overall mission and goals

Operations: The fact or condition of functioning or being active.

Innovation: The action or process of innovating.

Revolutionary: Involving or causing a complete or dramatic change.

Distribution: The action of sharing something out among a number of recipients.

World Wide: Extending or reaching throughout the world.

International: Existing, occurring, or carried on between two or more nations.

Accelerate: (of a vehicle or other physical object) begin to move more quickly.