Apple: $38bn tax bill come back home

7 years ago - Published in Finance, Fiscal & Legal

Apple said on Wednesday it would make a one-time payment of $38bn to repatriate some of its vast overseas cash holdings, one of the largest corporate spending plans announced since the passage of a tax cut signed by U.S. President Donald Trump.

The company, which has faced international criticism for its tax evasion policies, also said it would spend $30bn in the US over the next five years, creating 20,000 new jobs.

Lawmakers in the US, European Union and the UK have criticized Apple over its tax policies. The company holds $246bn in low-tax countries. During the election campaign, Donald Trump attacked Apple’s policy of building its phones, tablets and other gadgets overseas.

Apple is a success story that could only have happened in America, and we are proud to build on our long history of support for the US economy,” said Tim Cook, Apple’s CEO. “We believe deeply in the power of American ingenuity, and we are focusing our investments in areas where we can have a direct impact on job creation and job preparedness. We have a deep sense of responsibility to give back to our country and the people who help make our success possible.”

The company is the latest to announce a one-off payment as a result of recent changes to US tax law, which allows companies to pay a levy of 15.5% on overseas cash holdings that are repatriated to the US.

In 2013, a Senate committee accused Apple of using a “highly questionable” web of offshore vehicles to avoid paying taxes in the US. Senator John McCain said his constituents were “mad as hell” to learn that the world’s biggest company was paying tax rates that were sometimes lower than 1%. “I’ve never seen anything like this,” he said.

According to the Paradise Papers, a leak of 13.4m files from offshore service providers and tax havens’ company registries published by the Guardian and other international media, in the wake of the US and EU’s criticisms Apple secretly shifted parts of its empire to Jersey as part of a complex rearrangement to keep its low tax rates.

In December, the Irish government was forced to start collecting $15bn that the European Union says Apple has unfairly avoided in taxes. Apple is fighting the decision.