AAPL corporate tax rate is usually between 25%-26%. It's in their 10K every year. I wish there was better education on this topic -- Apple is not tax aggressive.
But that tax rate is applied to the profit, and profit can be lowered by deducting expenses, including the cost of licensing your own IP from your own foreign company. I'm pretty sure that iTunes wasn't invented in Luxembourg. How did $9 billion of intellectual property end up there in the first place?
I'm not saying Apple undervalued that IP when it was transferred out of the US as Facebook is being investigated for; but you can't just look the tax rate without also looking at the number (profit) that the rate is being applied to. If you deduct the cost of the US-based R&D to create the IP, and then transfer that IP out of the country and pay to license that IP and deduct it as a business expense to lower your US profits, you've lowered your taxes without lowering tax rate.
Agree. you're right .. whether the ip expense should be assigned to EU, Ireland or US is irrelevant. 26.4% should be the number we focus on .. how the US/EC and Ireland split it up doesn't much matter in the end,
None of this would be a problem ( well, less of a problem) if the US didn't want to tax for a second time the foreign earnings of US companies that have already accrued tax in the country where it was originally earned. Then tax havens or low tax regimes would be less successful, and all that money could be brought back to the US for investment.
Unfortunately for you yanks US Government taxeaters took the wrong lesson from the story of the Little Red Hen as children and fervently believe they could spend Apple's foreign earned money better than Apple could. So the result is like the little red hen, Apple doesn't bring the money back, and the US is worse off.
AAPL corporate tax rate is usually between 25%-26%. It's in their 10K every year. I wish there was better education on this topic -- Apple is not tax aggressive.
Is Apple deferring tax payments to the US? Yes, but is accruing that money and will pay the taxes when the money is repatriated.... Either way, it doesn't really impact Apple that much because they've accrued (set aside) the money to pay the taxes ..
No, Apple hasn't set aside (accrued) deferred taxes on upwards of $100B in "overseas" cash holdings. If they were to bring bring it all home to the US they would have around $30B additional due in currently unrecognized corporate tax obligations. And yes that's according to Apple themselves.
Apple has about $25 billion of accrued taxes that they have not paid. These are classified as non-current, they won't be paid for at least a year.
To me that looks like taxes accrued for repatriation
Or deferred taxes could be for deferred income, Remember Apple does not fully recognize all the revenue for the sale of each phone, why since some features of the phone is not available until future releases of software and the fact apple gives the software away. I know Apple has complicated income recognitions and some of it maybe due to what they do off shore. One thing you can be sure of, Apple is paying every penny of tax, Cook said in the Government hearing there are number of IRS people in Apple all the time going over their books, you know they are not letting Apple off the hook.
Just like Trump said, he may not paid taxes but he did not make the rules only follows the rule that People like Hillary and her Hubby put in place and non of them are doing anything quickly to change the laws.
People need to stop being angry at companies for not pay more taxes they need to complain to the government they set the rules. They all better be careful, if they take away the breaks the companies have the government may have to make the 50% of individual who pay no taxes, pay their share as well. I also know Apple effective tax rate is higher than mine so for those who say they are not paying enough needs to think twice.
AAPL corporate tax rate is usually between 25%-26%. It's in their 10K every year. I wish there was better education on this topic -- Apple is not tax aggressive.
Is Apple deferring tax payments to the US? Yes, but is accruing that money and will pay the taxes when the money is repatriated.... Either way, it doesn't really impact Apple that much because they've accrued (set aside) the money to pay the taxes ..
No, Apple hasn't set aside (accrued) deferred taxes on upwards of $100B in "overseas" cash holdings. If they were to bring bring it all home to the US they would have around $30B additional due in currently unrecognized corporate tax obligations. And yes that's according to Apple themselves.
Apple has about $25 billion of accrued taxes that they have not paid. These are classified as non-current, they won't be paid for at least a year.
To me that looks like taxes accrued for repatriation
Of course they have accrued deferred taxes. I've not ever said they haven't. What I HAVE said, and it comes directly from Apple, is that if they were to repatriate all their overseas cash they would incur another estimated $30B in corporate taxes over and above what they've allowed for in deferrals. That's why I disagreed with the statement SRice made. Apple has not made allowances for taxes on a very significant amount of revenues that's taken years to get to.
AAPL corporate tax rate is usually between 25%-26%. It's in their 10K every year. I wish there was better education on this topic -- Apple is not tax aggressive.
Is Apple deferring tax payments to the US? Yes, but is accruing that money and will pay the taxes when the money is repatriated.
I really don't like the word "repatriated". It makes it sounds like that the money was originally in the US, and that the US government is entitled to it and wants it back. These are international sales. Work performed and revenue generated outside the US. I suppose I shouldn't participate in this topic because it's way over my head. But the taste that is left in my mouth is that the US feels like they are getting skimped on money. They are not.
AAPL corporate tax rate is usually between 25%-26%. It's in their 10K every year. I wish there was better education on this topic -- Apple is not tax aggressive.
But that tax rate is applied to the profit, and profit can be lowered by deducting expenses, including the cost of licensing your own IP from your own foreign company. I'm pretty sure that iTunes wasn't invented in Luxembourg. How did $9 billion of intellectual property end up there in the first place?
I'm not saying Apple undervalued that IP when it was transferred out of the US as Facebook is being investigated for; but you can't just look the tax rate without also looking at the number (profit) that the rate is being applied to. If you deduct the cost of the US-based R&D to create the IP, and then transfer that IP out of the country and pay to license that IP and deduct it as a business expense to lower your US profits, you've lowered your taxes without lowering tax rate.
The US tax rate that is applied to the profit is 35% Federal and about 8.4% CA State. Profit is profit, after deductions. The 25% to 26% rate cited, is the effective tax rate Apple pays on their gross income, before deductions. Increasing their deductions reduces their effective tax rate, not the tax rate that is applied to their profit.
Is like if my adjusted gross income was $100 and the tax on it would be 20%. But I got $30 worth of deductions. So I ended up paying 20% tax on the $70 (my profit). Which comes to $14. Which brings EFFECTIVE tax rate to 14%. The 14% tax rate was not what I paid on my profit, it was what i paid on my adjusted gross income. My profit was still taxed at 20%.
AAPL corporate tax rate is usually between 25%-26%. It's in their 10K every year. I wish there was better education on this topic -- Apple is not tax aggressive.
Is Apple deferring tax payments to the US? Yes, but is accruing that money and will pay the taxes when the money is repatriated.
I really don't like the word "repatriated". It makes it sounds like that the money was originally in the US, and that the US government is entitled to it and wants it back. These are international sales. Work performed and revenue generated outside the US. I suppose I shouldn't participate in this topic because it's way over my head. But the taste that is left in my mouth is that the US feels like they are getting skimped on money. They are not.
Well, one area that might be getting skimped, depending on your point of view...All those foreign sales are not entirely independent of work that takes place in the US (R&D, marketing, etc). The work that takes place in the US contributes to making those overseas sales. In the US that's registered as an expense to reduce US profit, but none of the overseas sales revenue that the work contributed to gets booked as income in the US. Every time Apple puts on a big flashy media event launching a new product, does that expense come entirely off the US balance sheet even though half (or whatever the % is) of the sales of that product occurs outside the US? The net effect is that the % of revenue that results in profit is lower in the high-tax US and higher profit margins in lower tax countries.
Licensing your own IP which you've transferred to your own legal entity in another country is also a way to shift money from a high-tax country (the US) to a low tax country (Ireland). All perfectly legal, but you could argue all day about the "fairness" of it.
This is a huge problem for the US Treasury, because if this EC decision sticks - there's over $1T of taxes the EC could claw back and start collecting that will no longer be sent to the US Treasury from all the US companies which do business in the EU - not just Apple.
This is not true, the EU ruling explicitly states that USA can ask a part of those 13 billion if they are taxes owed to USA
I dont understand..
It comes down to this fuelling of profits to one country (Ireland) for all international sales. If Apple Operations International recorded sales to the US then the US would be due tax on those sales which were paid to Ireland at 0.005%. It's all above-board legally and normal practice for large companies, with the exception that Ireland's tax deal actually broke EU rules.
This is a huge problem for the US Treasury, because if this EC decision sticks - there's over $1T of taxes the EC could claw back and start collecting that will no longer be sent to the US Treasury from all the US companies which do business in the EU - not just Apple.
This is not true, the EU ruling explicitly states that USA can ask a part of those 13 billion if they are taxes owed to USA
I dont understand..
The EU ruling says that those taxes may not be generated in Ireland, they may be generated in other EU countries or in the USA so those countries can ask for a part of the amount.
Comments
Unfortunately for you yanks US Government taxeaters took the wrong lesson from the story of the Little Red Hen as children and fervently believe they could spend Apple's foreign earned money better than Apple could. So the result is like the little red hen, Apple doesn't bring the money back, and the US is worse off.
Or deferred taxes could be for deferred income, Remember Apple does not fully recognize all the revenue for the sale of each phone, why since some features of the phone is not available until future releases of software and the fact apple gives the software away. I know Apple has complicated income recognitions and some of it maybe due to what they do off shore. One thing you can be sure of, Apple is paying every penny of tax, Cook said in the Government hearing there are number of IRS people in Apple all the time going over their books, you know they are not letting Apple off the hook.
Just like Trump said, he may not paid taxes but he did not make the rules only follows the rule that People like Hillary and her Hubby put in place and non of them are doing anything quickly to change the laws.
People need to stop being angry at companies for not pay more taxes they need to complain to the government they set the rules. They all better be careful, if they take away the breaks the companies have the government may have to make the 50% of individual who pay no taxes, pay their share as well. I also know Apple effective tax rate is higher than mine so for those who say they are not paying enough needs to think twice.
I really don't like the word "repatriated". It makes it sounds like that the money was originally in the US, and that the US government is entitled to it and wants it back. These are international sales. Work performed and revenue generated outside the US. I suppose I shouldn't participate in this topic because it's way over my head. But the taste that is left in my mouth is that the US feels like they are getting skimped on money. They are not.
Is like if my adjusted gross income was $100 and the tax on it would be 20%. But I got $30 worth of deductions. So I ended up paying 20% tax on the $70 (my profit). Which comes to $14. Which brings EFFECTIVE tax rate to 14%. The 14% tax rate was not what I paid on my profit, it was what i paid on my adjusted gross income. My profit was still taxed at 20%.
Licensing your own IP which you've transferred to your own legal entity in another country is also a way to shift money from a high-tax country (the US) to a low tax country (Ireland). All perfectly legal, but you could argue all day about the "fairness" of it.