Apple Has a Record $250 Billion In Cash, 90% of It Is Banked Overseas (phonearena.com)

An anonymous reader quotes a report from Phone Arena: On Tuesday, Apple is expected to report its fiscal second quarter earnings. In that report, the tech titan will reportedly announce that it is holding $250 billion in cash. If you think that this is a lot of money, you're absolutely right. According to Marketwatch.com, this is more than the foreign currency reserves held by the U.K. and Canada combined. Looking at it another way, at current valuations Apple could purchase all of the outstanding shares of Walmart and Procter & Gamble and still have money left over. It has taken Apple only 4 and half years to double its cash hoard. During the fiscal first quarter of 2017, Apple was adding $3.6 million to its cash position every hour. It finished the quarter ending in December with $246.09 billion in cash. 90% of the money is banked overseas, which means that Apple would be one of the companies to benefit the most from President Trump's plan to offer a one time tax break on repatriated funds.

Comments

joy

[zlives]

wish i could pay no taxes

Re:joy

[Rei]

It's a symptom of the US's weird system of taxation. In most countries, profits earned from your overseas business is taxed overseas, while profit earned locally is taxed locally; it doesn't matter where you're headquartered. But the US demands taxes from US-headquartered companies' overseas business as well (after deducting what they pay locally). So this inherently creates a motive for moving headquarters out of the US (which the US has tried all sorts of means to stop). However, the money from their overseas business is only taxed when it comes back to the US, so it's also encouragement for them to keep the money overseas and invest in overseas business.

The US also does the same thing with personal income taxes. Eritrea is the only other country in the world that does that.

The world would be a lot simpler if the US decided to stop doing everything different from everyone else.

Re:joy

[ColdWetDog]

Right. Then we'd have to adopt the metric system.

North Korea might as well put us our of our misery.

Re:joy

[zlives]

i am not sure its that simple, Apple (also others) trasfer their IP's to a subsidiary in a tax shelter, then all the profit from local (country) sales is paid to the subsidiary that Holds the IP and is thus prevented from being taxed in the country of sale.

its a pretty nice setup for them. EU is realizing this is an issue as well and what is basically needed is some form of reform that can address multinationals. but chances of any reform happening is pretty close to nil. the US at least tries to recover some when the profit is brought home because of shareholders wanting some payment (profit). i am sure even this is barely scratching the surface, the convoluted tax code is convoluted by design.

Re:joy

[cas2000]

the transfer pricing scam.

say something costs a dollar to produce. a foreign subsidiary imports it for $1.50 and sells it for $5. That's $3.50 taxable profit in that foreign country.

now set up a subsidiary in a tax haven, and transfer ownership of everything to that subsidiary. then you can pretend that the foreign subsidiary buys the imported product from the tax haven subsidiary for, say, $4.99 and sells it locally for $5.00. at most, that's a 1 cent taxable profit...but actually that's a "loss" so untaxed...or, even worse, a tax credit to apply against other taxes that they can't evade.

this is one of several methods that apple and google and many other companies use to steal tens of billions of dollars from citizens in dozens of countries every year.

It works the other way too. Say you're a resources extraction company (oil, natural gas, coal, iron ore, whatever) and you want to avoid paying taxes and mining royalties to the country you're extracting the resources from. You set up a subsidiary in a tax-haven country, have them buy all of the extracted resources from you at a very steep discount (just barely breaking even, if that), and then the tax haven subsidiary sells them at full price. resources AND profit successfully extracted.

oh, and you don't even have to physically ship the resources to the tax haven country, you can do it all on paper or electronic records. the resources still leave the ports in the origin company and go direct to the actual buyer, but on paper it looks as if there's a middle-man.

both of these are easier if you have a compliant and/or corrupt government in the relevant countries. if not, you can tie them up in international courts for years or decades for "illegally" interfering with international trade if they try to stop you or even just slow down your rapacious looting of their resources.

if you've got a really compliant government you can get them to wear most of the costs of your business for you too - say a billion dollars for infrastructure like a train line to take coal to port; or guarantee your loans; or the old favourite of "tax incentives" to encourage you to hurry up and start ripping the country off.

I don't mind paying taxes

[stevez67]

I don't mind paying my taxes. I get a lot in return. I mind that corporations doing business in the USA, and other people, don't pay taxes.

Re: I don't mind paying taxes

[r1348]

Well, Apple then seems to sell a damn lot of iPhones in Ireland...

Banked overseas?

[crow]

It's not that the money is banked overseas. It's that the money isn't help by Apple directly, but by overseas wholly owned subsidiaries. I don't see why Apple Ireland (for example) couldn't invest its money in the United States just the same as any foreign company. What would be particularly interesting is if Apple Ireland decided to invest it's money in Apple stock. You could get almost all the advantages of a stock buy-back without having to repatriate the money. Am I missing anything, or would that work?

To put their fortune in perspective

[Salo2112]

It only would run the federal government for 3 weeks or so.

Apple should...

[Narcocide]

... buy Dell then shut it down, just for laughs.

Let's not forget...

[__aaclcg7560]

That Apple uses a Nevada corporation to avoid state corporatation taxes in US.

http://www.nytimes.com/2012/04/29/business/apples-tax-strategy-aims-at-low-tax-states-and-nations.html

Re:Shouldn't it return some to its shareholders?

[ghoul]

2 words Sun Microsystems. At the top of the Y2K boom Sun was a company which could do no wrong. It asked eeryone to use its language (Java) and people listened. It sold racks of servers which powered the /Internet. It built its own chips. Then it ran out of money and got acquired by Oracle. Apple wants everyone to use its platform , its Swift language, even build its own chips but it doesnt want to run out of money.

Just Tax Sales

[registrations_suck]

If you want to solve a lot of "problems", don't tax income (which is a horrible idea anyway), simply tax sales based on where the is purchased or used (not necessarily the same place). If you want, you can tax sales based on product class. For example, bread may be taxed at 0%, eggs may be taxed at 3%, while computers are taxed at 10%, with ERP systems being taxed at 20% (or whatever, I'm just picking these numbers out of the air). With this method, your "profit" becomes irrelevant. Besides all that - if Apple were to bring in its $250B into the U.S. "tax free", what do you think would happen to that money? It would go SOMEWHERE. Either to shareholders, or to expand facilities, or R&D, to buy another business, etc. You just collect your tax there. But the U.S. takes the position that it should be able to tax the same money an infinite number of times and the result is that Apple decides to leave its money where it is. Whose fault is that?

Sun had 2 problems Apple doesn't have

[Zontar_Thing_From_Ve]

Sun had 2 specific problems that Apple doesn't have.

1) When the internet bubble burst in the last 90s, Sun's great sales suddenly became a massive liability. Internet bubble companies suddenly stopped paying for the Sun equipment as they went bust. I don't know how much Sun actually got in terms of real revenue vs. billable charges that would have eventually been paid has those companies survived. But this led to a glut of barely used Sun equipment that depressed their prices on new machines and was maybe more than the market could absorb. It's unfair, but Sun basically ended up being punished for being successful.
2) Their failure to quickly respond to the market's demand for lower priced blade type servers vs. their legacy, expensive servers meant that companies who didn't do so well in the bubble like HP and IBM suddenly were selling cheap servers by the truckload in the new market demanding lower cost. Sun lost this segment and even though they eventually sold servers in it, the business that went away didn't ever come back.