Originally Posted by Crowley
An effective tax rate of less than 5% for outside the US is pretty sickening.
It was even worked out at less than 2% tax earlier last year:
It wasn't immediately obvious at the time if they were confusing taxes Apple wasn't due to pay but this hearing was clearer:
"Johnson asked Bullock about tax paid in foreign countries. "Apple paid over $900 million in income tax in fiscal 2012.""
Their profit was $41b in 2012 and they said 60% of profits are overseas so even $900m of $24.6b = 3.6% rate.
Reports keep confusing it though:
"The main subsidiary, a holding company that includes Apple's retail stores throughout Europe, has not paid any corporate income tax in the last five years, the report said.
Apple's arrangement has allowed it to pay just 1.9 percent tax on its $37 billion (24 billion pounds) in overseas profits in 2012, despite the fact that the average tax rate in the countries of the Organisation for Economic Co-operation and Development (OECD), its main markets, was 24 percent in 2012."
The holding company (Apple Operations International) is not liable for income tax so it's not that important - Tim had to keep repeating that. Apple is paying US taxes on the interest AOI makes but the interest is listed in their 10K filing as $522m in 2012 so it's not that they're talking about with the $900m, that's taxes on the profits of non-US operations, which is pretty low. There's a regional breakdown in the 10K:
and they have 5 subsidiaries managing various income. There's a lot of interesting numbers in that document actually. They even split up unit numbers. 4.6m desktops (25%), 13.5m laptops (75%), 35.1m iPods, 125m iPhones, 58m iPads. Revenue-wise, the iPhone is $80.4b out of $156.5b and the iPad is $32b so over 70% revenue is iOS and as Tim said in the hearing, their gross margins are higher on iOS devices. The iPod makes less than their desktop line now too.
European Corporation tax rates are around 25%, margins should be similar everywhere. China is the same. Their effective Corporation Tax rate overseas should be at least 5x what it is. Tim said it would be significantly higher this year. As long as he means the rate and not just the amount.