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Apple May Bring Back Billions In Profits To The U.S. (siliconbeat.com)
An anonymous Slashdot reader quotes a report from the San Jose Mercury News:
Apple CEO Tim Cook says the company plans to bring back billions of dollars in profit to the U.S. next year. Cook's statement, made during an interview with RTE radio Thursday, contradicts his previous public statements on the issue: He has said for years that U.S. corporate taxes are too high, and that the Silicon Valley company wouldn't be repatriating profit until its home country changed its tax code.
"Right now I would forecast that we repatriate next year"Cook said, saying that the company has "provisioned several billion" for that purpose.
An interesting side-note: Apple accounts for 40% of Silicon Valley's profits.
"Right now I would forecast that we repatriate next year"Cook said, saying that the company has "provisioned several billion" for that purpose.
An interesting side-note: Apple accounts for 40% of Silicon Valley's profits.
Apple is not bringing "back" profits. That money was never in the US. The money that is in question is profit Apple made on sales overseas in the EU. If the US chose to bring the money into the US, the tax rate would be probably 35% at the top rate. So Apple kept the money overseas and never moved it. Part of it is for operations overseas. Part of it was the tax rate the US would charge.
Well, there's spam egg sausage and spam, that's not got much spam in it.
This announcement makes perfect sense if you think of it as a move in the game of chess between Apple and the EU.
Despite his public proclamations and rhetoric, Tim Cook knows that the EU investigation into the tax deal between Ireland and Apple is absolutely not, "political crap" and he's had now enough time for his lawyers to tell him so. That event is an issue between the EU and Ireland and, in a sense, has nothing to do with Apple. The problem for Cook, then, is what to do? He can't put Apple in the middle of the dispute with the EU. He has no options.
Except one.
He can go to the US government to ask for help. "Hey Barak, that sweet deal we had with Ireland, the one that is letting us be profitable and employ lots of Americans? It's going south. Can you help?"
Obama isn't stupid either. He knows that now that the wheels are in motion, Apple is going to have to pay some taxes to someone - and Obama would rather the someone was the US Federal Government and not the Irish government. So what we're seeing now is Apple asking Washington for help. Washington have said, "Sure, we can help. But of course you're going to have to pay some tax somewhere..."
So Tim Cook has made this announcement about repatriation to show Barak that he's serious. Washington will now attempt to apply pressure to Brussels in order to get the EU to back down and allow Apple to continue to operate across the EU, all whilst paying less than 1% Corporation Tax. Meanwhile, Apple will repatriate some of their profits, which the US will tax, as part of the arrangements.
At least, that's their plan. However, bear in mind that the EU are just in the process of throwing out TTIP, which is going to make any attempt by the US to negotiate forcefully absolutely fraught with danger. The worst possible thing would be for the US to try and apply pressure right now: all they will do is make the entire EU mad at them. The only potential ally they would have had, the UK, is in the process of leaving the EU [with the planned start of Article 50 to commence in the New Year].
But the thing that all us little people need to remember here is that every pound, euro or dollar in tax that Apple "avoids", well that's a pound, euro or dollar that we have to find. When companies don't pull their weight, tax-wise, the private individuals are the ones who get stung. You only need to look at the international tax arrangements of the big multinationals to realise what a joke this process has become. What we need is a clear, internationally-agreed law that says that for tax purposes, a transaction occurs at the location that the buyer initiates the transaction. [ Turning that around, and saying that it is where the seller processes the transaction achieves nothing: Apple and others would just put their transaction processing system in a tax haven ].
The interesting thing is that these practices cost "local" tax payers HUGE amounts of extra taxes. So it's entirely possible that what we're seeing here could set a precedent that benefits 500 million people across the EU... Let's hope so...
I would be all for lowering their taxes, on one condition.
American workers only within the US.
You want the tax breaks ? You quit going the H1B route cheating the US workforce out of a job.
You hire foreign labor ? Your tax rate will increase to compensate. Pretty simple. Do the math, set the rates to make hiring US workers a financial win for the company. Price of doing business in the US I'm afraid.
Don't like it ? Move your company to India or Ireland or wherever you want. See how well you do when you're denied access to the US market.
Those that are gaming the system can just gtfo or deal with the tax man.
Apple is "repatriating" their money before the US Congress does away with the deferred tax payment provisions in the tax code. The code basically allows any company to book profits in other countries and basically agrees to paying the deferred taxes if they repatriate their money. Both the US government and the big US corporations are sensitive to bad press. The government could "request" the large corporations repatriate their money and equate that request with US patriotism. One can only hope all the other US companies doing business in Europe does the same thing. It will be cheaper to pay US taxes than worry about the EU\EC passing retroactive tax laws and other fines or penalties. Ireland attracts companies because of their favorable tax rates. That was not a secret and did not violate any EU laws. They have been doing this for awhile with no complaints. Did the EU just not notice? They have gobs of useless officials in Brussels that are supposed to be monitoring these types of things.
Since Europe has not produced any technology firms to compete with US tech companies they are left with shaking down profitable US companies. It's amazing the morons in EU\EC think they can harass US companies and not evoke a response from the US.
It's easy to make more profit than your competitors when you're aren't paying any tax, in any country that you operate in.
Strangely bad for PR when it gets on the news, though. And strangely ends up changing from a hush-hush golf-and-a-posh-meal secret deal with the local ministers to laws being changed to prevent it happening when it does make the news.
Starbucks found that out in the UK.
So, technically, Apple don't make 40% of the profits in the Silicon Valley. Because those profits aren't properly taxed. And they aren't registered as profit in Silicon Valley at all. They are registered as profit only in Ireland. Which was charging them basically 0% tax. They are the LEAST profitable company in Silicon Valley, or else the US taxman would have had their share a long time ago.
But they are in fact the most profitable in Ireland, while also being the least taxed. Strange that.
I could earn twice what I do if I didn't have to pay tax.
And I could make any company outstrip all its competitors if it didn't have to pay tax (get company, make no changes, stop paying tax, bang, you just doubled your profit most likely, and can lower prices or buy suppliers to put your competitors out of the market).
I'm much more interested in an article entitled "Who pays the most tax in Silicon Valley?"
Sigh. There are many on the American right who try to lecture us on places they've obviously never been, based on a few factoids cherry-picked from Wikipedia.
Il n'y a pas de Planet B.
But it's not just Norway is it?
If you ever keep an eye on those OECD comparison things, there's a whole host of countries that do consistently better than the US on education, health, crime, corruption, social welfare, life expectancy etc. So take Norway out, let's compare Sweden, Denmark, Netherlands, France, Germany, UK, Ireland, Iceland, Canada, Australia, New Zealand, Hong Kong, Singapore, Japan etc etc and you will see a strong correlation between appropriate regulation and quality of life.
Conversely if you look at the worst places in the world, Somalia, Sierra Leone, Afghanistan etc they all have next to no rules, you can do what ever you an get away with and the people suffer as a consequence.
The US is the richest nation on earth with the most abundant natural resources. It should win at everything, but it doesn't.
Why do you think that is?