I cannot believe the unreasonableness of the responses to many of these issues coming up in the new recently. I will speak in generalities in an attempt to avoid flames from emotionally connected readers. You have to follow the rules that are on the books. If you don't like the rules (loopholes) fight to get them changed (plugged). There is a process in order to change the rules and retroactive implementation leads to chaos because strategy and decisions are made based on those established rules. Reading all these entitled, misinformed, logically flawed opinions leaves no wonder why our economy, politics, country & world is in such a mess. Is this the new normal?
Retrospectivity is part and parcel of the rules, in this case, and is applied in many spheres.
I cannot believe the unreasonableness of the responses to many of these issues coming up in the new recently. I will speak in generalities in an attempt to avoid flames from emotionally connected readers. You have to follow the rules that are on the books. If you don't like the rules (loopholes) fight to get them changed (plugged). There is a process in order to change the rules and retroactive implementation leads to chaos because strategy and decisions are made based on those established rules. Reading all these entitled, misinformed, logically flawed opinions leaves no wonder why our economy, politics, country & world is in such a mess. Is this the new normal?
Retrospectivity is part and parcel of the rules, in this case, and is applied in many spheres.
Only a valid argument if the law is clear and unchanged. The EU, having no corporate tax competancy, has effectively seized control of member state's tax affairs by using a law set up for a different purpose.
Apple does not rely on Irish accounting procedures to avoid paying profits taxes on foreign sales, but to delay paying them until later. The tax code doesn't levy the tax until the foreign earnings actually cross the border. Apple, like other companies, do that because of two widely held views: the tax rate (%) levied by the USA on foreign earnings is currently too high, and tax reform (lower tax rates) are likely in the relatively near future.
Now, Apple computes its what-if tax bill every year, based on the assumption that its foreign earnings were actually remitted back to the USA. Then Apple sets those dollars aside (cash, Treasury bonds, etc.) while waiting for the day when Congress reforms the tax code. That obligation is shown as a liability on Apple's balance sheet, and the Treasury bonds are part of its "cash and equivalents" reported in the press. One day, Apple will remit its foreign earnings from past years, and also pay its tax bill to the IRS -- at the new, post-reform tax rate.
The EU evidently wants to lay hands on that money before the US tax code is reformed. Its actions are based on the erroneous argument that Apple has somehow colluded with Ireland to escape taxation -- as opposed to legally delaying the date of taxation until a more propitious time.
Apple has not evaded its taxes. No individual EU nation is claiming that it did, and the IRS recognizes that Apple is in compliance with US law. Tim Cook is right.
So is it alright if I get my iPhone 7 and hold off paying for it until such time as Apple brings it down to a price that I think is fair?
To continue your analogy, yes if you can find a retailer who has that policy in place then it's fair. that's akin to the current policy which doesn't levy the tax until it crosses the border. if one doesn't like that policy, one needs to change it...but you can't fault people for utilizing it as it exists today.
"The Company’s (Apple) effective tax rates (some of which is deferred) for all years differ from the statutory federal income tax rate of 35% due primarily to certain undistributed foreign earnings, a substantial portion of which was generated by subsidiaries organized in Ireland, for which no U.S. taxes are provided because such earnings are intended to be indefinitely reinvested outside the U.S."
EDIT: And a more recent one, 2015 Substantially all of the Company’s undistributed international earnings intended to be indefinitely reinvested in operations outside the U.S. were generated by subsidiaries organized in Ireland, which has a statutory tax rate of 12.5%. As of September 26, 2015, U.S. income taxes have not been provided on a cumulative total of $91.5 billion of such earnings. The amount of unrecognized deferred tax liability related to these temporary differences is estimated to be $30.0 billion.
I know this specific footnote to which you refer.
I think I am finally beginning to understand your confusion. I will try once more, and after that I will probably have exhausted my abilities to do so. First, you are conflating the word "indefinitely" with the word "forever". Second, you are conflating this issue with the EU-Ireland-Apple-US spat. In relation to the first, 'indefinitely reinvested' simply means that, "at this point, we have no plans to bring it back." All multinationals do it all the time. In relation to the second, this has nothing whatsoever to do with the total taxes that Apple would owe at home+abroad (assuming there is no tax holiday or tax deal in the US, which we don't currently have anyway, so let's stipulate to what we currently know is the situation). It does however, have a lot to do with what could end up being a major EU-US spat. When a firm does not pay taxes because of differences between when income is earned and taxes paid, then, under either IFRS or US GAAP, firms are required to create a deferred tax liability for the difference between the taxes paid and the taxes owed, unless in the case of foreign income the firm intends to "indefinitely postpone" repatriation of the income. This is called a temporary difference.
While the statutory tax rate is 12.5% in Ireland, the effective tax rate that Apple has paid taxes at the rate of about 2.2% in Ireland, which is consistent with the very low rates noted in recent press reports. Given the cumulative earnings of $91.5 B noted in Apple’s financial statements and the U.S corporate statutory tax rate of 35% (and booked through Ireland), Apple should raise a deferred tax liability of $91.5 B x (35% – 2.2%) = $30.012, which is roughly equivalent to the deferred tax liability Apple estimates of $30.0 B. It simply says that, if all that $91.5B were repatriated to the US today, at the current US tax rates, Apple would owe the US government $30B. They can decide to do this any time, any portion of the $91.5B, for any reason (in fact, Cook is suggesting that they might).
So, note a number of things: (i) Nothing in there says the money can't be brought back; (ii) Nothing in there says anything about whether the appropriate tax rate from the standpoint of the Irish authorities is 2.2% or 12.5%, or whether Apple got some special deal from the Irish government (as the EU claims); (iii) Nothing in there says that has done anything different than any other US company; (iv) Nothing in there says that Apple hasn't paid its 'fair share' in the EU (whatever the heck that means); (v) Nothing in there says that Apple doesn't currently owe $30B to the US government -- in fact, that's the company's estimate of what it would owe in the absence of a special deal. (Btw, any decent equity analyst should factor that into his/her valuation of Apple, by estimating the probability and the timing of that happening -- I am guessing that's what the good ones do).
But most importantly, note that, if EU takes $15B, Apple will still owe no more than $30B in the aggregate: it's just that the US Treasury will now only get $15B. It's no skin off Apple's back, it's only a question of to whom they should send, or how they should split, that $30B check. In fact the same logic would apply if Apple (and others) got a tax holiday, or special low tax rate from the US government: if, for example, the US said, "we'll let you bring it in at a special rate of 10%", Apple would owe $7B to the US; if the EU took $15B before Apple sent it to the US, Apple will ask for, and get, a $8B credit from the US government. Either way, no big deal for Apple.
In addition to all this, there are the issues of: (i) Fingering one company; (ii) Fingering one country; (iii) Making it retroactive.
"The Company’s (Apple) effective tax rates (some of which is deferred) for all years differ from the statutory federal income tax rate of 35% due primarily to certain undistributed foreign earnings, a substantial portion of which was generated by subsidiaries organized in Ireland, for which no U.S. taxes are provided because such earnings are intended to be indefinitely reinvested outside the U.S."
EDIT: And a more recent one, 2015 Substantially all of the Company’s undistributed international earnings intended to be indefinitely reinvested in operations outside the U.S. were generated by subsidiaries organized in Ireland, which has a statutory tax rate of 12.5%. As of September 26, 2015, U.S. income taxes have not been provided on a cumulative total of $91.5 billion of such earnings. The amount of unrecognized deferred tax liability related to these temporary differences is estimated to be $30.0 billion.
I know this specific footnote to which you refer.
I think I am finally beginning to understand your confusion. I will try once more, and after that I will probably have exhausted my abilities to do so. First, you are conflating the word "indefinitely" with the word "forever". Second, you are conflating this issue with the EU-Ireland-Apple-US spat. In relation to the first, 'indefinitely reinvested' simply means that, "at this point, we have no plans to bring it back." All multinationals do it all the time. In relation to the second, this has nothing whatsoever to do with the total taxes that Apple would owe at home+abroad (assuming there is no tax holiday or tax deal in the US, which we don't currently have anyway, so let's stipulate to what we currently know is the situation). It does however, have a lot to do with what could end up being a major EU-US spat.
When a firm does not pay taxes because of differences between when income is earned and taxes paid, then, under either IFRS or US GAAP, firms are required to create a deferred tax liability for the difference between the taxes paid and the taxes owed, unless in the case of foreign income the firm intends to "indefinitely postpone" repatriation of the income. This is called a temporary difference.
While the statutory tax rate is 12.5% in Ireland, the effective tax rate that Apple has paid taxes at the rate of about 2.2% in Ireland, which is consistent with the very low rates noted in recent press reports. Given the cumulative earnings of $91.5 B noted in Apple’s financial statements and the U.S corporate statutory tax rate of 35% (and booked through Ireland), Apple should raise a deferred tax liability of $91.5 B x (35% – 2.2%) = $30.012, which is roughly equivalent to the deferred tax liability Apple estimates of $30.0 B. It simply says that, if all that $91.5B were repatriated to the US today, at the current US tax rates, Apple would owe the US government $30B. They can decide to do this any time, any portion of the $91.5B, for any reason (in fact, Cook is suggesting that they might).
So, note a number of things: (i) Nothing in there says the money can't be brought back; (ii) Nothing in there says anything about whether the appropriate tax rate from the standpoint of the Irish authorities is 2.2% or 12.5%, or whether Apple got some special deal from the Irish government (as the EU claims); (iii) Nothing in there says that has done anything different than any other US company; (iv) Nothing in there says that Apple hasn't paid its 'fair share' in the EU (whatever the heck that means); (v) Nothing in there says that Apple doesn't currently owe $30B to the US government -- in fact, that's the company's estimate of what it would owe in the absence of a special deal. (Btw, any decent equity analyst should factor that into his/her valuation of Apple, by estimating the probability and the timing of that happening -- I am guessing that's what the good ones do).
But most importantly, note that, if EU takes $15B, Apple will still owe no more than $30B in the aggregate: it's just that the US Treasury will now only get $15B. It's no skin off Apple's back, it's only a question of to whom they should send, or how they should split, that $30B check. In fact the same logic would apply if Apple (and others) got a tax holiday, or special low tax rate from the US government: if, for example, the US said, "we'll let you bring it in at a special rate of 10%", Apple would owe $7B to the US; if the EU took $15B before Apple sent it to the US, Apple will ask for, and get, a $8B credit from the US government. Either way, no big deal for Apple.
In addition to all this, there are the issues of: (i) Fingering one company; (ii) Fingering one country; (iii) Making it retroactive.
I'll stop there.
Thank you sir. I don't think I was confused but a very good summation nonetheless, and your time to do so is appreciated. Correct, Apple will probably now increase their deferred tax obligations based on the recent ruling that it should not be ignored as non-taxable income. Until now at least it has been unaccounted for from a tax standpoint, which is part of the point I was raising.
I listened to Tim Cook trying to defend Apple's pitifully low tax rate on the BBC news this morning and it just sounded bad. Very bad PR. Attacking the EU is very unwise. All the people whose businesses pay tax at 20% are looking at this and saying why should Apple pay tax at less than 1%. As a life-long Apple evangelist, even I find this Apple hard to swallow.
Same here, I'm generally a fan of Apple and I voted for Brexit so I'm no EU-lover. But I just can't see how anyone can defend what Apple is doing here, for a company that prides itself on making people's lives better, focussing on customers rather than shareholders (apparently), being a eco-friendly company, doing the "right thing" when it comes to slave labour and child labour in china, taking part in charitable donations & events etc. etc. to then claim it's OK to pay 0.005% tax when every other company has to pay 12%+. Especially considering Apple's vast wealth.
The Irish government as present has not yet appealed - the finance minister stated his intention to but is currently struggling to garner enough support within the government to push it through. Indeed the people of ireland are not looking on this favourably after suffering years of cut-backs and austerity to find the government giving sweetener deals to large multinational companies and possibly REFUSING billions in backdated tax which could pay for schools, housing, hospitals etc. etc.
To an outsider, the United States appear more and more xenophobic with each passing day. If Trump succeeds, I can see USA becoming more like North Korea or to a lesser extent, a mini Russia.
Well.... You seem to be swallowing the ".005%" line, which sounds like a crock of shit. Tim says that in that period they paid $400 million in taxes in that area... unless my math is wrong (it isn't); they would've had to be paying on $8 trillion (that's trillion, with a t) for the .005% to be true. Lol; both figures can't be true. If they can show they payed the $400 million they claim. Your reason for feeling they are doing something wrong is nullified.
Pretty good article that. Cuts to the chase without oversimplifying it.
Not at all. It completely confuses "provision for taxes" versus "cash tax rate." And statutory versus effective tax rates. (You may also want to take a look at my response to Gatorguy above).
Provision for taxes reflects what Apple thinks it owes. But there are also all types of tax credits (or additional taxes owed) in a given year, and the timing of those don't necessarily follow the precise tax year in which the actual transaction happened. For example, if employees exercise their options, companies get a tax credit; if a subsidiary is closed down and sold off for a loss, companies get a tax credit; if they overpaid in a particular year, they get a tax credit later. Of course, the reverse can also happen (they might owe more this year on last year's taxes, because they underpaid).
Provision for Taxes minus (or plus) credits (or additional amounts owed) is the Cash Taxes Paid. Either number can be lower or higher than the other. Indeed, in the long run, the two two rates should roughly equal for most companies.
In calculating EPS (and therefore equity analyst forecasts), the number that matters and is used is the Provision, not Cash Taxes. In other words, the market is, at a minimum, valuing Apple as though it is paying 26.7%, not 19% (per the Bloomberg article).
Then there is the separate ball of wax of the statutory (e.g., 12.5%) versus effective (which I estimate in Ireland to be 2.2%, see reply to GG above). What matters is the effective rate. If it is paid a legal fashion, there was no attempt by the company to evade it, and the taxing authority agrees with that, it's done. End of story.
The spat is between EU and Ireland. Now between EU and the US (again, see reply to GG above). Apple is caught in the middle, despite playing by the rules 100%.
I listened to Tim Cook trying to defend Apple's pitifully low tax rate on the BBC news this morning and it just sounded bad. Very bad PR. Attacking the EU is very unwise. All the people whose businesses pay tax at 20% are looking at this and saying why should Apple pay tax at less than 1%. As a life-long Apple evangelist, even I find this Apple hard to swallow.
Same here, I'm generally a fan of Apple and I voted for Brexit so I'm no EU-lover. But I just can't see how anyone can defend what Apple is doing here, for a company that prides itself on making people's lives better, focussing on customers rather than shareholders (apparently), being a eco-friendly company, doing the "right thing" when it comes to slave labour and child labour in china, taking part in charitable donations & events etc. etc. to then claim it's OK to pay 0.005% tax when every other company has to pay 12%+. Especially considering Apple's vast wealth.
The Irish government as present has not yet appealed - the finance minister stated his intention to but is currently struggling to garner enough support within the government to push it through. Indeed the people of ireland are not looking on this favourably after suffering years of cut-backs and austerity to find the government giving sweetener deals to large multinational companies and possibly REFUSING billions in backdated tax which could pay for schools, housing, hospitals etc. etc.
To an outsider, the United States appear more and more xenophobic with each passing day. If Trump succeeds, I can see USA becoming more like North Korea or to a lesser extent, a mini Russia.
Well.... You seem to be swallowing the ".005%" line, which sounds like a crock of shit. Tim says that in that period they paid $400 million in taxes in that area... unless my math is wrong (it isn't); they would've had to be paying on $8 trillion (that's trillion, with a t) for the .005% to be true. Lol; both figures can't be true. If they can show they payed the $400 million they claim. Your reason for feeling they are doing something wrong is nullified.
"They just picked a number from I don't know where," Cook said. "In the year that the Commission says we paid that tax figure, we actually paid $400m. We believe that makes us the highest taxpayer in Ireland that year."
So Apple only made $3.2 billion in profit from Ireland and the EU in the whole of 2014? I didn't realise sales were that bad! Or is he being deliberately obfuscating by picking on one part of the structures in Ireland but not taking them as a whole?
He's the CEO of a publicly traded company. He cannot deliberately obfuscate such details without risk of criminal penalties. This has been said multiple times in all these discussions. It's really common sense.
"I think that's exactly what it is," Cook said. "I think it's a desire to reallocate taxes that should be paid in the U.S. to the EU."
Wow, that's rich. Set up a corporation with the express intention of avoiding paying taxes in the US or EU, then try and play them off against each other when you get caught.
Sorry Tim, your hands are slick with red stuff.
Get caught abiding by Irish tax laws in Ireland? The EU is not ready for the global economy and should be dissolved. What the fuck do they think this is? A Socialist World?
The union of the states comprising the United States should be dissolved, because I don't like they way it operates, from my jaundiced, ill informed, one-eyed, childish, naive, parochial point of view.
First you sound like Trump. Now you sound like a Texan
"They just picked a number from I don't know where," Cook said. "In the year that the Commission says we paid that tax figure, we actually paid $400m. We believe that makes us the highest taxpayer in Ireland that year."
So Apple only made $3.2 billion in profit from Ireland and the EU in the whole of 2014? I didn't realise sales were that bad! Or is he being deliberately obfuscating by picking on one part of the structures in Ireland but not taking them as a whole?
He's the CEO of a publicly traded company. He cannot deliberately obfuscate such details without risk of criminal penalties. This has been said multiple times in all these discussions. It's really common sense.
I don't think you understand his obligations as clearly as you should, and become confused with what you think is permissible comments. There are no "criminal penalties" if he's not falsely certifying financial issues. Incomplete statements or comments based on cherry-picked facts are not on that level.
The people here claiming Tim Cook is being reactive and hypocritical are themselves reactive and hypocritical. I mean you've completely ignored ALL the facts that Cook mentioned.
They pay ALL the tax they are REQUIRED by LAW to pay and as such pay the most tax in the world. What Cook is rightly saying is Apple feels they are being singled out because they are a MASSIVE target for theiving governments that want an easy way to make money.
If this was really such a big problem then why has the EU waited until now to investigate Apple's practices when they've been in Ireland and subject to applicable laws since the 80's, well into the period Ireland became part of the EU?
Now turn the tables on yourselves. If you were paying all the taxes you were legally to pay, there was no special tax breaks that you had access to, and yet someone claimed there was which lead to you paying more taxes than you legally had to as well as back taxes would YOU be happy to pay that?
So why is it wrong for Apple to fight this when that's EXACTLY what is happening to them?
I don't think you understand his obligations as clearly as you should, and become confused with what you think is permissible comments. There are no "criminal penalties" if he's not falsely certifying financial issues. Incomplete statements or comments based on cherry-picked facts are not on that level.
What facts is Cook cherry-picking? And which ones are incomplete?
I've been buying Apple products for over a quarter century, and have had dozens in my time. I'm a big supporter. But their tax dodging disgusts me. It steals from everyone, depriving governments of the funds they need to run decent services. In the end that even kills children as the health services suffer. Mr Cook should be ashamed of himself for refusing to concede that his company is in the wrong here. A pox on you Cook. And I'm increasingly feeling a pox on Apple. I suspect I'm not alone. It's a PR disaster you morons.
Look, I assume you live in a (relatively) free country. Put your money where your mouth is, and buy your products from a non-tax dodging company that does not "steal", does not "deprive governments", and does not "kill children".
And when you've done so, do come back and let us know who that company is, so that we can all follow your great lead.
I don't think you understand his obligations as clearly as you should, and become confused with what you think is permissible comments. There are no "criminal penalties" if he's not falsely certifying financial issues. Incomplete statements or comments based on cherry-picked facts are not on that level.
What facts is Cook cherry-picking? And which ones are incomplete?
I assume you meant that question for the poster who claimed that's what he was doing. That person was not me. Otherwise I'm pretty sure you agree with my advice to @latifbp since as far as I know it is correct.
Of little note so far is that other countries have been encouraged to examine Apple's tax practices in their countries, which could impact Apple more than the initial findings of the EU commission. Other countries in Europe where Apple operates have higher corporate tax rates which could push the tax bill up a few notches. http://www.ft.com/cms/s/0/5c1ee628-6f10-11e6-a0c9-1365ce54b926.html
The people here claiming Tim Cook is being reactive and hypocritical are themselves reactive and hypocritical. I mean you've completely ignored ALL the facts that Cook mentioned.
They pay ALL the tax they are REQUIRED by LAW to pay and as such pay the most tax in the world. What Cook is rightly saying is Apple feels they are being singled out because they are a MASSIVE target for theiving governments that want an easy way to make money.
If this was really such a big problem then why has the EU waited until now to investigate Apple's practices when they've been in Ireland and subject to applicable laws since the 80's, well into the period Ireland became part of the EU?
Now turn the tables on yourselves. If you were paying all the taxes you were legally to pay, there was no special tax breaks that you had access to, and yet someone claimed there was which lead to you paying more taxes than you legally had to as well as back taxes would YOU be happy to pay that?
So why is it wrong for Apple to fight this when that's EXACTLY what is happening to them?
If I was relying on some loopholes and tax havens to pay a ridiculously low tax rate and someone asked me to pay back taxes eventually then I might not be happy about paying it but I wouldn't be surprised either. You can take the p*ss only for so long.
What I don't get about the people claiming Apple is breaking no laws therefore they've done no wrong is that by the same logic, Apple should plunder the environment up to the very edge of the law because that's best for the shareholder. It would take a true cynic to say that Apple's green policies are only for marketing reasons, I truly believe it's out of a sense of responsibility. They should treat paying taxes the same way, responsibly.
He's right. But what I find interesting is that Tim Cook supports political candidates here in the US that would support imposing high taxes on Apple and other companies. I like Tim Cook a lot, but he needs to seriously take a look at his conflicting opinions.
BTW: the EU has been at peace for over 70 years, thanks to the EC/EU. That's a record.
By all means, this fact alone has made the world a far better place.
Correction: Europe has had the longest stretch of peace in its history since 1945 (over 70 years), thanks to the United States of America. We occupied after WW2 and it's been at peace (not counting terrorism) ever since.
All arguments presuppose taxation as such is moral, of course.
Excellent point! And sorely ignored in this debate. Note how many "tax apologists" come out of the woodwork in discussions like these, without ever considering the morality of taxes themselves. Governments, of course, assume they are.
Comments
I think I am finally beginning to understand your confusion. I will try once more, and after that I will probably have exhausted my abilities to do so. First, you are conflating the word "indefinitely" with the word "forever". Second, you are conflating this issue with the EU-Ireland-Apple-US spat. In relation to the first, 'indefinitely reinvested' simply means that, "at this point, we have no plans to bring it back." All multinationals do it all the time. In relation to the second, this has nothing whatsoever to do with the total taxes that Apple would owe at home+abroad (assuming there is no tax holiday or tax deal in the US, which we don't currently have anyway, so let's stipulate to what we currently know is the situation). It does however, have a lot to do with what could end up being a major EU-US spat.
When a firm does not pay taxes because of differences between when income is earned and taxes paid, then, under either IFRS or US GAAP, firms are required to create a deferred tax liability for the difference between the taxes paid and the taxes owed, unless in the case of foreign income the firm intends to "indefinitely postpone" repatriation of the income. This is called a temporary difference.
While the statutory tax rate is 12.5% in Ireland, the effective tax rate that Apple has paid taxes at the rate of about 2.2% in Ireland, which is consistent with the very low rates noted in recent press reports. Given the cumulative earnings of $91.5 B noted in Apple’s financial statements and the U.S corporate statutory tax rate of 35% (and booked through Ireland), Apple should raise a deferred tax liability of $91.5 B x (35% – 2.2%) = $30.012, which is roughly equivalent to the deferred tax liability Apple estimates of $30.0 B. It simply says that, if all that $91.5B were repatriated to the US today, at the current US tax rates, Apple would owe the US government $30B. They can decide to do this any time, any portion of the $91.5B, for any reason (in fact, Cook is suggesting that they might).
So, note a number of things: (i) Nothing in there says the money can't be brought back; (ii) Nothing in there says anything about whether the appropriate tax rate from the standpoint of the Irish authorities is 2.2% or 12.5%, or whether Apple got some special deal from the Irish government (as the EU claims); (iii) Nothing in there says that has done anything different than any other US company; (iv) Nothing in there says that Apple hasn't paid its 'fair share' in the EU (whatever the heck that means); (v) Nothing in there says that Apple doesn't currently owe $30B to the US government -- in fact, that's the company's estimate of what it would owe in the absence of a special deal. (Btw, any decent equity analyst should factor that into his/her valuation of Apple, by estimating the probability and the timing of that happening -- I am guessing that's what the good ones do).
But most importantly, note that, if EU takes $15B, Apple will still owe no more than $30B in the aggregate: it's just that the US Treasury will now only get $15B. It's no skin off Apple's back, it's only a question of to whom they should send, or how they should split, that $30B check. In fact the same logic would apply if Apple (and others) got a tax holiday, or special low tax rate from the US government: if, for example, the US said, "we'll let you bring it in at a special rate of 10%", Apple would owe $7B to the US; if the EU took $15B before Apple sent it to the US, Apple will ask for, and get, a $8B credit from the US government. Either way, no big deal for Apple.
In addition to all this, there are the issues of: (i) Fingering one company; (ii) Fingering one country; (iii) Making it retroactive.
I'll stop there.
Provision for taxes reflects what Apple thinks it owes. But there are also all types of tax credits (or additional taxes owed) in a given year, and the timing of those don't necessarily follow the precise tax year in which the actual transaction happened. For example, if employees exercise their options, companies get a tax credit; if a subsidiary is closed down and sold off for a loss, companies get a tax credit; if they overpaid in a particular year, they get a tax credit later. Of course, the reverse can also happen (they might owe more this year on last year's taxes, because they underpaid).
Provision for Taxes minus (or plus) credits (or additional amounts owed) is the Cash Taxes Paid. Either number can be lower or higher than the other. Indeed, in the long run, the two two rates should roughly equal for most companies.
In calculating EPS (and therefore equity analyst forecasts), the number that matters and is used is the Provision, not Cash Taxes. In other words, the market is, at a minimum, valuing Apple as though it is paying 26.7%, not 19% (per the Bloomberg article).
Then there is the separate ball of wax of the statutory (e.g., 12.5%) versus effective (which I estimate in Ireland to be 2.2%, see reply to GG above). What matters is the effective rate. If it is paid a legal fashion, there was no attempt by the company to evade it, and the taxing authority agrees with that, it's done. End of story.
The spat is between EU and Ireland. Now between EU and the US (again, see reply to GG above). Apple is caught in the middle, despite playing by the rules 100%.
I knew the .005% was bullshit. But good to have that "consigned".
First you sound like Trump. Now you sound like a Texan
They pay ALL the tax they are REQUIRED by LAW to pay and as such pay the most tax in the world. What Cook is rightly saying is Apple feels they are being singled out because they are a MASSIVE target for theiving governments that want an easy way to make money.
If this was really such a big problem then why has the EU waited until now to investigate Apple's practices when they've been in Ireland and subject to applicable laws since the 80's, well into the period Ireland became part of the EU?
Now turn the tables on yourselves. If you were paying all the taxes you were legally to pay, there was no special tax breaks that you had access to, and yet someone claimed there was which lead to you paying more taxes than you legally had to as well as back taxes would YOU be happy to pay that?
So why is it wrong for Apple to fight this when that's EXACTLY what is happening to them?
And when you've done so, do come back and let us know who that company is, so that we can all follow your great lead.
Of little note so far is that other countries have been encouraged to examine Apple's tax practices in their countries, which could impact Apple more than the initial findings of the EU commission. Other countries in Europe where Apple operates have higher corporate tax rates which could push the tax bill up a few notches.
http://www.ft.com/cms/s/0/5c1ee628-6f10-11e6-a0c9-1365ce54b926.html
I don't care what arrangement Apple and the Irish Government came to - they are equally culpable.
So far, Apple has only been asked to pay very modest back taxes. If the EU decided also to apply a penalty, it could be up to ten times that amount.
Roll over or die, Apple.
Tim Millea.
What I don't get about the people claiming Apple is breaking no laws therefore they've done no wrong is that by the same logic, Apple should plunder the environment up to the very edge of the law because that's best for the shareholder. It would take a true cynic to say that Apple's green policies are only for marketing reasons, I truly believe it's out of a sense of responsibility. They should treat paying taxes the same way, responsibly.