Apple’s overseas tax evasion stirs debate over US tax code
The disclosure follows a lengthy examination of the technology giant’s tax practices by the U.S. Senate’s Permanent Subcommittee on Investigations, which is expected to air its findings at a hearing today.
The newspaper reports that Apple Chief Executive Tim Cook is preparing to testify at the hearing, and is expected to propose changes to a tax code that provides American companies strong incentives to keep overseas earnings bottled up at foreign subsidiaries.
Apple used technicalities in Irish and American tax law to pay little or no corporate taxes on at least USD74 billion over the past four years, according to the Senate panel’s findings. The investigation found no evidence that Apple did anything illegal. Aides to the subcommittee said they have never seen a company use a subsidiary that didn’t owe corporate income taxes to any country.
Apple didn’t dispute that entities it set up didn’t pay corporate taxes but denied they were designed to avoid taxes. The company said it pays local taxes on overseas earnings and U.S. taxes on investment income generated at its Irish subsidiaries.
The company pointed to the "extraordinary" amount of corporate income taxes it pays—USD6 billion in 2012—and said its U.S. effective federal cash tax rate was 30.5% last year, not much below the 35% statutory rate.
"What they often leave out is the second part of the story, that Apple is one of the largest tax avoiders," said Sen. John McCain (R., Ariz.), who described Apple as the "most egregious offender" among U.S. corporations trying to avoid tax bills.
See the full story on the Wall Street Journal