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Apple paid 2% in taxes on $36.8B of foreign revenue for fiscal 2012

post #1 of 171
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Numbers from Apple's 10-K filing with the U.S. Securities and Exchange Commission reveal that the company paid only 1.9 percent in income taxes on $36.8 billion of foreign revenue for the 12-month period ending on Sept. 29.

After accounting for $490 million in deferrals, Apple paid a total of $713 million in foreign income tax over the past year, equating to only a fraction of the combined $13.32 billion in U.S. federal and state taxes that were levied at a rate of 35 percent.

As noted by The Washington Post, Apple's growth in foreign markets has been a main driver to the company's continued success, with this year's $36.8 billion in pretax earnings representing a 53 percent increase from fiscal 2011, when the company brought in $24 billion. In 2010, Apple paid a foreign tax rate of 1.2 percent on earnings of $13 billion.

Fiscal 2012 Taxes
Tax numbers in million of dollars. | Source: Apple


The high U.S. corporate tax rate has prompted many American multinationals to leave cash in foreign accounts, as repatriating the money would cause it to be subject to taxation.

As of Sept. 29, $82.6 billion of Apple's cash, cash equivalents and marketable securities were held by foreign subsidiaries. The is up 52 percent from 2011, when the company had $54.3 billion in offshore holdings.

Apple does account for a portion of its foreign profits as subject to U.S. taxation, however, which is recorded in quarterly statements as a liability. These so-called "phantom" tax obligations could theoretically be eliminated, thereby raising the company's profits by up to $10.5 billion for the past three years.

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.

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 say that Apple is unlikely to make such a move, however, as erasing the huge U.S. obligation would be detrimental to its stature as a responsible tax payer. According to The Post, the Cupertino company is said to be lobbying to change U.S. tax law to ease repatriation costs if and when it decides to bring the money back into the country.
post #2 of 171

Disgusting.

post #3 of 171

Cue: Socialists and Marxists.

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post #4 of 171

Wow...so much for bringing the labor back home.

post #5 of 171
"In 2010, Apple was paid a foreign tax rate of 1.2 percent on earnings of $13 billion."

Wow, Apple "was paid" tax. And the rest of us pay it. No wonder the profits are so high!
post #6 of 171

Another reason the manufacturing will never come back to the US. Apple most likely uses that foreign cash to pay for all the manufacturing essentially money laundering it and sending the finished goods back to the states which they then resell to get their money into the country without paying any additional taxes.

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post #7 of 171
I wonder who will claim Apple didn't pay what was legally required of them.

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post #8 of 171

Please change the title to "Apple LEGALLY paid in taxes"

Anyone that doesn't do what they can to legally minimize their tax liability is simply ignorant.  All of you would do the EXACT same thing too.

So what should folks and companies do?  Pay more taxes to make you feel better?

Apple made most of their profits overseas and paid whatever taxes needed to be paid on that revenue in the appropriate country.  Why should they have to pay more for the "privilege" of bringing the money home??  I don't think its right.

If whiners like you need to be mad, be mad at the governments of the world.  They were appointed by the people and the laws written too were passed.  Don't hate the player, hate the game.

Waiting for all the liberal "I want something for nothing" whiners to come out of the woodwork.

post #9 of 171

The problem is in our tax code. If you are a U.S. citizen living abroad, your income past a certain level is taxed by the US Govt. Of course, you get a tax credit for any income taxes already paid in the foreign country where you made that money.

 

Perhaps we should treat corporations like living people, instead of creating incentives to leave their money on overseas.

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post #10 of 171
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Originally Posted by freddych View Post

The problem is in our tax code. If you are a U.S. citizen living abroad, your income past a certain level is taxed by the US Govt. Of course, you get a tax credit for any income taxes already paid in the foreign country where you made that money.

 

Perhaps we should treat corporations like living people, instead of creating incentives to leave their money on overseas.

 

Or they could lower taxes.

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post #11 of 171

The US has the highest corporate tax rate in the world after Japan lowered theirs 2 years ago. If I had to pay those kind of rates I'd avoid it also, especially when the US government is one of the least efficient and most fiscally wasteful governments around. Quit punishing businesses for success so you can go on spending sprees to buy votes.

post #12 of 171
Quote:
Originally Posted by mstone View Post

Another reason the manufacturing will never come back to the US. Apple most likely uses that foreign cash to pay for all the manufacturing essentially money laundering it and sending the finished goods back to the states which they then resell to get their money into the country without paying any additional taxes.

And they don't pay any taxes on the profits from the sale of those goods, right? The sale of those goods generates no sales tax either, right?
post #13 of 171

As long as they pay their fair share in the US, who gives a shit!

 

That, by the way, is why they won't pull out of the UK market for those who recently said that they should!

post #14 of 171
Quote:
Originally Posted by robbyx View Post

And they don't pay any taxes on the profits from the sale of those goods, right? The sale of those goods generates no sales tax either, right?

 

You raise good points. You also forgot the property taxes Apple (and other companies) pay. The focus tends to be entirely on income taxes as if these are the only ones.

 

But probably the more important point is that Apple doesn't pay taxes at all. Every dollar Apple pays in taxes (however small or large) is paid by its customers.

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post #15 of 171
Pretty scummy really, definitely avoiding the moral obligation to pay taxes.

It may be to the letter of the law, but it certainly isn't to the spirit of the law. However the laws won't be changed because the people in power would also have too much to lose due to their own business interests.

Leaving the money in offshore accounts, tax not paid, whilst waiting for and lobbying for a lower rate of "repatriation tax" is fairly close to money laundering in my book. Pay the tax in a timely manner guys.

Personally I'm in favour of a "sold something in a country - then pay corporation tax on the profits of that sale in that country" OR (nothing else) "pay corporation tax ONLY in the country you were first registered in, on worldwide profits".

(The first can be simplified down to the government setting zero rate corporation tax and far far far higher sales taxes (30% ) to cover for the loss in corporation tax income.)
post #16 of 171
Quote:
Originally Posted by robbyx View Post


And they don't pay any taxes on the profits from the sale of those goods, right? The sale of those goods generates no sales tax either, right?


If Apple is so 'innovative' in managing income tax, I don't know why they are not doing something about sales tax. If I buy a Mac or any other stuff in the US from Amazon, I do not get charged for sales tax but on Apple online store, I do.

post #17 of 171
Re: Soli... I wonder who will claim Apple didn't pay what was legally required of them.

I'd say not long at all. See Blood's entry - 1st comment.

I'm in the UK too, but as long as they've paid all they're required to...
post #18 of 171
Originally Posted by Hattig View Post
Pretty scummy really, definitely avoiding the moral obligation to pay taxes.

 

Sounds like they're paying taxes to me. Look, it's right in the title! Or maybe you're using "moral" in an ironic sense. Like "it's ironic that you didn't even read the title before posting".

 

…it certainly isn't to the spirit of the law.

 

So every single person who has ever wanted to pay less in taxes, every middle income family who takes the time to sit down and look at their options, every person who took a look at the varying tax rates and decided to take less income from one place to get lower taxes in another, they're all morally bankrupt? We should just give all our disposable income to the government in taxes?


Originally Posted by arch View Post
If Apple is so 'innovative' in managing income tax, I don't know why they are not doing something about sales tax. If I buy a Mac or any other stuff in the US from Amazon, I do not get charged for sales tax but on Apple online store, I do.

 

What do you want them to do, lobby for the repeal of sales tax? Lobbying is stupid. Repealing sales tax isn't an answer. And Amazon gets the boot on that in a few… what is it, months?

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post #19 of 171
Quote:
Originally Posted by Hattig View Post

Pretty scummy really, definitely avoiding the moral obligation to pay taxes.

 

Bullshit. There is no such "moral obligation."

 

 

Quote:
Originally Posted by Hattig View Post

It may be to the letter of the law, but it certainly isn't to the spirit of the law.

 

1rolleyes.gif

 

 

Quote:
Originally Posted by Hattig View Post

Leaving the money in offshore accounts, tax not paid, whilst waiting for and lobbying for a lower rate of "repatriation tax" is fairly close to money laundering in my book.

 

Uh huh. 1rolleyes.gif Maybe you need a new book then.

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post #20 of 171
Quote:
Originally Posted by arch View Post

If Apple is so 'innovative' in managing income tax, I don't know why they are not doing something about sales tax. If I buy a Mac or any other stuff in the US from Amazon, I do not get charged for sales tax but on Apple online store, I do.

 

Apple is complying with the law here. Albeit it is a stupid law, they are still complying with it.

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post #21 of 171
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Originally Posted by thebudda View Post

The US has the highest corporate tax rate in the world after Japan lowered theirs 2 years ago. If I had to pay those kind of rates I'd avoid it also, especially when the US government is one of the least efficient and most fiscally wasteful governments around. Quit punishing businesses for success so you can go on spending sprees to buy votes.

I couldn't agree more. Election spending has jumped from 2 billion last year to 6 billion this year. It's disgusting. The last thing we need to do is feed the beast!

Furthermore, these are FOREIGN profits. Apple pays its taxes in the US. All of its design, R&D, etc is done here. Its employees pay taxes here. It pays property taxes and generates sales tax revenue here - all over the country. Why is the US government entitled to a huge chunk of Apple's foreign earnings? Just because they are based in the US?
post #22 of 171
Why bring foreign cash home if it is going to be spent overseas? Why bring the money home to be taxed if it's going to then go back?

Other countries could tax Apple more. Why don't they?

The rules are the same for every company and their accountants follow them to minimize taxes. If you have any complaints, complain to those other countries.
post #23 of 171

This is tax on Foreign profits -- isn't it likely that Apple PAID TAX in those other nations?

 

Does any accountant have knowledge of how this works? I'd hate to be suckered into another "hate Apple" for doing what all the other corporations are doing. Last month it was "hate Apple because they pay 5% in taxes" -- which is wrong. But then their competitors are paying 2% and some are paying nothing at all.

 

We have to change the rules that apply to all large corporations -- they pay far too little now.

post #24 of 171
Quote:
Originally Posted by Eriamjh View Post

Why bring foreign cash home if it is going to be spent overseas? Why bring the money home to be taxed if it's going to then go back?

 

I actually think Apple wants to bring that cash home to invest here. But they're going to get a big bite taken out of their ass when they do it, they'll find other places and ways to invest it. Who can blame them. Good for them.

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post #25 of 171
Quote:
Originally Posted by Fake_William_Shatner View Post

We have to change the rules that apply to all large corporations -- they pay far too little now.

 

Really? How much "should" they pay?

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post #26 of 171

The problem isn't Apple. The problem is the US Tax code.

post #27 of 171
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Originally Posted by allenbf View Post

The problem isn't Apple. The problem is the US Tax code.

Actually the problem is that tax systems have not rebalanced based on globalization having happened.

 

Starbucks in the UK are a spectacular example of this.  They have paid less than 1% corporation tax on GBP3bn of sales since 1998 (http://www.bbc.co.uk/news/business-19967397) vs. a main rate of 24%.  They've done that by effectively making themselves "unprofitable" in the UK due to the extremely high price they pay their coffee supplier.  The fact that their coffee supplier happens to be another part of Starbucks, conveniently located in Luxembourg which has extremely low corporate tax rates, is somewhat convenient.

 

Now, it appears what they are doing is legal, so I actually say, good on them.  This notion of paying what is "moral" or is within "the spirit of the law" is rubbish.  Personally, I'm never going to pay a penny more than what I'm absolutely legally required to pay.  If the government want me to pay more, change the law so that I have to (and deal with the consequence that I may not vote for you next time as a result).

 

That does not however mean what they are doing is fair.  They have been able to create themselves a competitive advantage purely because they are a huge company.  However, our political leaders need to change the laws to make it fair.

 

I feel the same about Apple here.  I don't consider it fair that they've paid so little in tax, but I don't consider it immoral that they have.  If they've done nothing illegal - fair play to them.  If we don't think what they are doing is right, change the laws so they can't do that anymore.

 

Many of these problems are born of the fact that we have political leaders with no backbone.  It's far easier to kick up a stink that what corporations are doing is immoral than it is for them to do something which may be unpopular - i.e. make the law work so that people have to pay taxes.

post #28 of 171
Quote:
Originally Posted by thebudda View Post

The US has the highest corporate tax rate in the world after Japan lowered theirs 2 years ago. If I had to pay those kind of rates I'd avoid it also, especially when the US government is one of the least efficient and most fiscally wasteful governments around. Quit punishing businesses for success so you can go on spending sprees to buy votes.

Get it right, votes are bought with donated money not taxes lol
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post #29 of 171
Quote:
Originally Posted by SolipsismX View Post

I wonder who will claim Apple didn't pay what was legally required of them.

Plus Apple doesn't make the laws!
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post #30 of 171
Quote:
Originally Posted by allenbf View Post

The problem isn't Apple. The problem is the US Tax code.

Exactly.
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post #31 of 171
Quote:
Originally Posted by robbyx View Post

Quote:
Originally Posted by mstone View Post

Another reason the manufacturing will never come back to the US. Apple most likely uses that foreign cash to pay for all the manufacturing essentially money laundering it and sending the finished goods back to the states which they then resell to get their money into the country without paying any additional taxes.

And they don't pay any taxes on the profits from the sale of those goods, right? The sale of those goods generates no sales tax either, right?

I was going to mention that but they only pay taxes on half of it, the profit. The end user pays the sales tax in states that have sales tax.

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post #32 of 171
Quote:
Originally Posted by MJ1970 View Post

Really? How much "should" they pay?

Should be more than 2%. Btw there's a flaw in your signature, all governments use other people's money not just socialist.
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post #33 of 171
Quote:
Originally Posted by dasanman69 View Post

Should be more than 2%.

 

2.1%? 2.2%? How much? Why?

 

 

Quote:
Originally Posted by dasanman69 View Post

Btw there's a flaw in your signature

 

No there isn't.

 

 

Quote:
Originally Posted by dasanman69 View Post

all governments use other people's money not just socialist.

 

lol.gif

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post #34 of 171

Yes, the US has the highest corporate tax rates in the world, but theres enough loopholes so that companies like GE essentially pay nothing.

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post #35 of 171
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Originally Posted by sflocal View Post

Please change the title to "Apple LEGALLY paid in taxes"

Anyone that doesn't do what they can to legally minimize their tax liability is simply ignorant.  All of you would do the EXACT same thing too.

I work as a software contractor. As such, I'm self employed and could use any number of tax avoidance schemes. I don't though. I earn decent money and so does my partner. The problem is that no-one lives in isolation. Investing in the people around us ultimately makes life better for our families. Sure, that extra money might buy a better car or a longer holiday but it's not going to dramatically change my life. I'd prefer to see lower crime, better schools and better healthcare.

I'd rather be thankful for what I've got than jealous of what I don't. I've been lucky in life, others haven't.

So you can guess that I'm pretty much in favour of Apple paying significantly more tax. It's down to the governments to change the law though. That's unlikely to happen when it's the people in power who benefit from weak tax avoidance laws.

But, hey, I'm not going to change anyone's mind, am I? That's not how Internet political debates work.
post #36 of 171
Quote:
Originally Posted by thebudda View Post

The US has the highest corporate tax rate in the world after Japan lowered theirs 2 years ago. If I had to pay those kind of rates I'd avoid it also, especially when the US government is one of the least efficient and most fiscally wasteful governments around. Quit punishing businesses for success so you can go on spending sprees to buy votes.

 

There is no bigger scam going in the United States than owning a corporation. You can write-off all sorts of stuff: cars, offices, computers, trips, clothing, tools, raw materials...assuming you have revenue, of course. NOBODY pays that corporate tax rate you reference. My company doesn't. We pay very little in taxes due to all these deductions.

 

The corporate share of all taxes paid in the U.S. is 20% of what it was 50 years ago. I think that's bad, because it means more money has to be shouldered by the middle-class, who can't afford it.

 

Apple is a U.S. corporation, and ALL of its profits (worldwide) should be taxed as income to that U.S. corporation, no matter how Apple has structured its phantom corporations in Ireland and The Netherlands to minimize its taxes. Of course, that will never happen, because Apple is lobbying to make sure its taxes go down, not up.

 

That makes them no different than any other company in the Fortune 500. That's how our laws and tax code allow them to act.

 

That said, have you seen what Apple's tax rate is in the U.S.? It's like 27%! Apple is paying a phenomenal amount of money in taxes because they're making an incredible amount of money in profits. That makes me happy to support them, but I still wish they wouldn't lobby to lower their taxes.


The defense that "all corporations do it" isn't good enough. Apple should be a cut above, not running with the crowd.

post #37 of 171
Quote:
Originally Posted by RichL View Post

I work as a software contractor. As such, I'm self employed and could use any number of tax avoidance schemes. I don't though.

 

Too bad for you.

 

 

Quote:
Originally Posted by RichL View Post

The problem is that no-one lives in isolation. Investing in the people around us ultimately makes life better for our families.

 

No one would stop you from making those "investments."

 

 

Quote:
Originally Posted by RichL View Post

I'd prefer to see lower crime, better schools and better healthcare.

 

Then why would you give that money to the State for goodness sake?!?!

 

 

Quote:
Originally Posted by RichL View Post

I'd rather be thankful for what I've got than jealous of what I don't.

 

Good for you. We all should have that attitude. That doesn't have anything to do with paying taxes though.

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post #38 of 171
Quote:
Originally Posted by MJ1970 View Post

2.1%? 2.2%? How much? Why?



No there isn't.



lol.gif

Oh and the US government runs out of our money all the time hence the trillions of dollars in debt. As far as how much? I don't know. Go by gadget size, iPhone 5 is 4%, iPad is 9.7% and so forth. That's just as arbitrary as anything else and no I'm not serious.
Edited by dasanman69 - 11/5/12 at 2:38pm
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post #39 of 171
Quote:
Originally Posted by macsimcon View Post

There is no bigger scam going in the United States than owning a corporation. You can write-off all sorts of stuff: cars, offices, computers, trips, clothing, tools, raw materials...assuming you have revenue, of course. NOBODY pays that corporate tax rate you reference. My company doesn't. We pay very little in taxes due to all these deductions.

 

While I wouldn't call it a "scam," you are basically right. The more you tax profits, the less profit there will be. The profit will be made to "disappear" in any number of ways. You've listed a few ways that happens.

 

 

Quote:
Originally Posted by macsimcon View Post

Apple is a U.S. corporation, and ALL of its profits (worldwide) should be taxed as income to that U.S. corporation, no matter how Apple has structured its phantom corporations in Ireland and The Netherlands to minimize its taxes.

 

Why?

 

 

Quote:
Originally Posted by macsimcon View Post

That said, have you seen what Apple's tax rate is in the U.S.? It's like 27%! Apple is paying a phenomenal amount of money in taxes because they're making an incredible amount of money in profits. That makes me happy to support them, but I still wish they wouldn't lobby to lower their taxes.


The defense that "all corporations do it" isn't good enough. Apple should be a cut above, not running with the crowd.

 

1rolleyes.gif

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post #40 of 171
Quote:
Originally Posted by dasanman69 View Post

Oh and the US government runs out of our money all the time hence the trillions of dollars in debt.

 

a) That's still someone else's money.

b) They'll eventually run out of that too.

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