Apple Releases Statement Ahead of Tim Cook's Senate Appearance on Tax Policy

[MacRumors]

Apple today released a statement [PDF] ahead of Apple CEO Tim Cook, CFO Peter Oppenheimer, and head of tax operations Phillip A. Bullock's appearances in front of the U.S. Senate Permanent Subcommittee on Investigation tomorrow.

In the seventeen page statement, Apple notes that it has created hundreds of thousands of jobs in the United States -- both directly and through suppliers and contractors. It notes that the company paid nearly $6 billion in federal taxes in fiscal 2012 and the company expects to pay $7 billion in 2013.

The company also says Apple "does not use tax gimmicks", pushing back against reporting in The New York Times that examined Apple's international tax strategies.

Apple, a California company, employs tens of thousands of Americans, creates revolutionary products that improve the lives of tens of millions of Americans, and pays billions of dollars annually to the US Treasury in corporate income and payroll taxes. Apple's shareholders - from individuals and institutions to pension funds and public employee retirement systems - have benefitted from the Company's success through the appreciation of its stock price and generous dividends. Apple safeguards the capital entrusted to it by its shareholders with prudent management that reflects the Company's extensive international operations. Apple complies fully with both the laws and spirit of the laws. And Apple pays all its required taxes, both in this country and abroad.

Apple reiterates repeatedly that all of its financial activities are fully legal and in the best interests of its shareholders. The company says it supports comprehensive reform of the U.S. corporate tax system, instead proposing a new system that is "revenue neutral, eliminates all tax expenditures, lowers tax rates and implements a reasonable tax on foreign earnings that allows free movement of capital back to the US." Apple notes that this would likely result in the company paying even more in corporate tax, but supports it nonetheless.

The document includes an extensive history of the company, as well as fairly extensive details about Apple's corporate structure and tax practices, including details about Apple's sales and use tax payments ($1.3 billion in FY2012), state income tax payments ($830 million), and Apple's contributions to employer payroll taxes ($327 million).

It lays out Apple's network of foreign subsidiaries, including several located in Ireland which distribute 'active foreign, post-tax income as dividend payments within Apple's foreign corporate structure'.

Apple wants to make clear to the Subcommittee that the Company does not use its Irish subsidiaries or any other entities to engage in the following tax practices that were the focus of the Subcommittee's September 20, 2012 hearing, entitled Offshore Profit Shifting and the US Tax Code. Specifically, Apple does not move its intellectual property into offshore tax havens and use it to sell products back into the US to avoid US tax, nor does it use revolving loans from CFCs to fund its domestic operations. Apple does not hold money on a Caribbean island, does not have a bank account in the Cayman Islands, and does not move any taxable revenue from sales to US customers to other jurisdictions in order to avoid US taxation.

The statement continues in some detail, examining Apple's various international holdings and how the company uses them to fund international expansion of retail stores and other investments.

It also notes that analysis of its decision to issue $17 billion in debt to fund share repurchases and dividends, rather than repatriating foreign earnings, "was in its shareholders' best interests".

Apple CEO Tim Cook and CFO Peter Oppenheimer will appear at 9:30AM Eastern time in front of the U.S. Senate Permanent Subcommittee on Investigation. The hearing, titled "Offshore Profit Shifting and the U.S. Tax Code - Part 2" will be in the Dirksen Senate Office Building. The subcommittee is attached to the U.S. Senate Committee on Homeland Security and Government Affairs.

Other witnesses at the hearing include tax policy experts from the IRS and the Department of the Treasury, as well as professors from Harvard and Villanova.

Note: Due to the political nature of the discussion regarding this topic, the comment thread is located in our Politics, Religion, Social Issues forum. All MacRumors forum members and site visitors are welcome to read and follow the thread, but posting is limited to forum members with at least 100 posts.

Article Link: Apple Releases Statement Ahead of Tim Cook's Senate Appearance on Tax Policy

 

[MultiMediaWill]

[url=http://cdn.macrumors.com/im/macrumorsthreadlogodarkd.png]Image[/url]


Apple today released a statement [PDF] ahead of Apple CEO Tim Cook, CFO Peter Oppenheimer, and head of tax operations Phillip A. Bullock's appearances in front of the U.S. Senate Permanent Subcommittee on Investigation tomorrow.

In the seventeen page statement, Apple notes that it has created hundreds of thousands of jobs in the United States -- both directly and through suppliers and contractors. It notes that the company paid nearly $6 billion in federal taxes in fiscal 2012 and the company expects to pay $7 billion in 2013.

The company also says Apple "does not use tax gimmicks", pushing back against reporting in The New York Times that examined Apple's international tax strategies.

Image​

Apple reiterates repeatedly that all of its financial activities are fully legal and in the best interests of its shareholders. The company says it supports comprehensive reform of the U.S. corporate tax system, instead proposing a new system that is "revenue neutral, eliminates all tax expenditures, lowers tax rates and implements a reasonable tax on foreign earnings that allows free movement of capital back to the US." Apple notes that this would likely result in the company paying even more in corporate tax, but supports it nonetheless.

The document includes an extensive history of the company, as well as fairly extensive details about Apple's corporate structure and tax practices, including details about Apple's sales and use tax payments ($1.3 billion in FY2012), state income tax payments ($830 million), and Apple's contributions to employer payroll taxes ($327 million).

It lays out Apple's network of foreign subsidiaries, including several located in Ireland which distribute 'active foreign, post-tax income as dividend payments within Apple's foreign corporate structure'.
The statement continues in some detail, examining Apple's various international holdings and how the company uses them to fund international expansion of retail stores and other investments.

It also notes that analysis of its decision to issue $17 billion in debt to fund share repurchases and dividends, rather than repatriating foreign earnings, "was in its shareholders' best interests".

Apple CEO Tim Cook and CFO Peter Oppenheimer will appear at 9:30AM Eastern time in front of the U.S. Senate Permanent Subcommittee on Investigation. The hearing, titled "Offshore Profit Shifting and the U.S. Tax Code - Part 2" will be in the Dirksen Senate Office Building. The subcommittee is attached to the U.S. Senate Committee on Homeland Security and Government Affairs.

Other witnesses at the hearing include tax policy experts from the IRS and the Department of the Treasury, as well as professors from Harvard and Villanova.

Note: Due to the political nature of the discussion regarding this topic, the comment thread is located in our Politics, Religion, Social Issues forum. All MacRumors forum members and site visitors are welcome to read and follow the thread, but posting is limited to forum members with at least 100 posts.

Article Link: Apple Releases Statement Ahead of Tim Cook's Senate Appearance on Tax Policy

Apple needs to start caring about America and creating domestic jobs.

 

[Peace]

Apple needs to start caring about America and creating domestic jobs.

All American tech companies need to do this.

 

[lolkthxbai]

Well, there you have it. Apple officially stated it doesn't not evade taxes using the "Double Irish Dutch Sandwich".

Do we believe them?

 

[Tiger8]

Apple needs to start caring about America and creating domestic jobs.

I thought they already have tens of thousands of jobs here? Are you saying they should stop operations overseas altogether?

Nothing is more American than a capitalist company, and Apple is a prime example of a capitalist company

 

[lolkthxbai]

All American tech companies need to do this.

Tim Coom says we need to bring back the knowledge to operate in a manufacturing plant before we can bring those jobs back.

 

[the8thark]

Note: Due to the political nature of the discussion regarding this topic, the comment thread is located in our Politics, Religion, Social Issues forum. All MacRumors forum members and site visitors are welcome to read and follow the thread, but posting is limited to forum members with at least 100 posts.

What is MR so scared of that they enforce this?
But I do see their point. Best to let the regulars post on it, rather then everyone post and then later on delete all those posts anyways. Knowing how things run here, this is the better action taken.

Back on topic . . . .

Apple earn money overseas.
Apple pay tax on these overseas earnings tot he overseas countries.
But the government in unhappy and want more of this done in the US or brought back to the US so it can be US taxed.

It's the US government's fault. No one wants to pay a high tax by the US on money they were already taxed on by foreign countries.

 

[Aidan5806]

So from what i understand of this debate, Apple intends to argue that their methods of paying taxes both domestically and internationally fulfill all legal codes they are bound by. That sounds legitimate. However, it is also my understanding that the Senate is attempting get more tax dollars out of Apple and big corporations like it for activities outside the US. That kind of makes me wonder if this is an extended way of enforcing trade tariffs, which is not legal.

 

[69650]

This is not just a problem in the US. The UK government is also looking into tax evasion on a grand scale by major US corporations such as Apple, Google, Amazon and Starbucks. They all use complex accounting smoke and mirrors to channel their UK and European profits through tax havens, thereby paying virtually no UK corporation tax on billions of pounds worth of sales every year.

Google was up before the UK equivalent of a senate hearing just last week and they really laid into Google. It was funny to watch them try and worm their way out of it.

They are also planning to discuss this issue as a priority at the upcoming G8 meeting to try and hammer out a deal to clamp down on it worldwide. Seems like the politicians are finally making a concerted effort to address this issue at last.

I'm all for the clampdown. Seems like the more tax they get from these big guys the less they'll want from me and my small company.

 

[supremedesigner]

Bottom line: This is not Apple's problems. It is the governments' problems. Apple is doing what's right.

 

[maxosx]

It's the US government's fault.

The tax code was already in place before Apple incorporated. If they didn't like it then don't incorporate. It's as simple as that.

To play the victim & point the finger of blame on the government is weak, pathetic & typical of the entitlement mentality.

 

[Millah]

Apple needs to start caring about America and creating domestic jobs.

Are you meaning to imply that America is only good for manufacturing, and all the other higher skill jobs here are not considered? America is much better than just an assembly country. We have an environment that suits creation and engineering, not just manufacturing. We have a treasure trove of intellectual property. To think Apple doesn't care about America simply because the majority of assembly work is done off shores, is insulting to American entrepreneurship. Apple is an example of American capitalism at its finest. Think about all the people employed directly by Apple, and indirectly (developers, component suppliers, etc). Apple created a $2 billion+ industry that didn't exist prior to 2008 (mobile apps). Apples done quite a bit for America and the world at large.

 

[LagunaSol]

In the seventeen page statement, Apple notes that it has created hundreds of thousands of jobs in the United States -- both directly and through suppliers and contractors. It notes that the company paid nearly $6 billion in federal taxes in fiscal 2012 and the company expects to pay $7 billion in 2013.

Meanwhile, Google pumps billions into Korean corporate coffers with its "free" mobile OS development, turning Samsung into the singlemost dominant mobile electronics provider in the world.

Yet I'm supposed to cheer for Google and not Apple. Not happening.

 

[Mike Valmike]

Plus, Apple has a lot of expenses overseas. Why should they pay to repatriate money, some of which would have to turn right back around and fund foreign operations?

This has happened for decades in tech now, it's just that all of it is on one ledger instead of split up among licensee and parent company ledgers across territories.

 

[Millah]

Meanwhile, Google pumps billions into Korean corporate coffers with its "free" mobile OS development, turning Samsung into the singlemost dominant mobile electronics provider in the world.

Yet I'm supposed to cheer for Google and not Apple. Not happening.

Yes, funny how all these "patriots" seem to constantly pick apart their American company while constantly bolstering a Korean conglomerate with questionable practices both in Korea and abroad. And Apples the "unpatriotic" one? Irony at its finest.

 

[jayducharme]

It notes that the company paid nearly $6 billion in federal taxes in fiscal 2012 and the company expects to pay $7 billion in 2013.

And I can't help but wonder where all that money goes...

Tim Coom says...

Must be another analyst.

 

[Oohara]

Nice timing with those "made in the US" macs...

 

[rdowns]

Nice timing with those "made in the US" macs...

Tim Cook said Apple would build some PCs here months ago, long before these hearings were scheduled.

 

[sjo]

Plus, Apple has a lot of expenses overseas. Why should they pay to repatriate money, some of which would have to turn right back around and fund foreign operations?

This has happened for decades in tech now, it's just that all of it is on one ledger instead of split up among licensee and parent company ledgers across territories.

If they distribute their profits to their shareholders, it'd seem reasonable to patriate the profits as well and pay any tax consequence involved.

I don't think anyone has demanded that they repatriate the money they need to run and / or expand their oversees operations. Not to repatriate money they intent to passover to shareholders is curious. The IRS (congress) would be fool to allow this precedent.

Borrowing tens of billions to be distributed to shareholders seems pretty fishy, when the company claims to have 150 billion in it's coffers around the world.

 

[VoR]

Google was up before the UK equivalent of a senate hearing just last week and they really laid into Google. It was funny to watch them try and worm their way out of it.

Funny how you saw it this way I listened to google saying the same thing as they've always said, rather arrogantly and along the lines of : 'We're following your laws and trying our best to pay as little tax as possible... It's your fault'
I've got utmost respect for them... their 'worming' is absolutely insignificant compared to all the other big American firms that have been singled out (strange how they're all American?), look at the wording in apples statement for one (although judging by a couple of the response posts, it works ). Starbucks being singled out was a little silly for example, was Nero mentioned in comparison? They're registered in the Isle of Man and paid absolutely zilch...

It was absolutely embarrassing watching the government trying to guilt trip PwC... they don't live in the real world - They're too busy trying to balance (marketing+++) the simpleton electorate's view that the rich should be heavily taxed, with the reality that there's 10000 ways round their ridiculous tax laws and 100 countries that will happily accept their business. Why pay money if you don't have to? Any 'nice-guys' payments by these firms are simply for good publicity.

 

[mbh]

Well, there you have it. Apple officially stated it doesn't not evade taxes using the "Double Irish Dutch Sandwich".

Do we believe them?

I think Apple is very aware that they are under an intense amount of scrutiny from almost every angle, so they're playing pretty much everything as straight as possible. I really doubt that Tim and Peter would go and lie in front of congress. Apple gets headlines for merely having magnets in their products; imagine what lying about their taxes would do.

 

[rdlink]

This is not just a problem in the US. The UK government is also looking into tax evasion on a grand scale by major US corporations such as Apple, Google, Amazon and Starbucks. They all use complex accounting smoke and mirrors to channel their UK and European profits through tax havens, thereby paying virtually no UK corporation tax on billions of pounds worth of sales every year.

Google was up before the UK equivalent of a senate hearing just last week and they really laid into Google. It was funny to watch them try and worm their way out of it.

They are also planning to discuss this issue as a priority at the upcoming G8 meeting to try and hammer out a deal to clamp down on it worldwide. Seems like the politicians are finally making a concerted effort to address this issue at last.

I'm all for the clampdown. Seems like the more tax they get from these big guys the less they'll want from me and my small company.

Boy are you naive. The more they get the more they want.

It's the governments who are always looking at ways to game the system. Let us find a way to double-dip. Wait, that little piggy got more than me. I want my spot at the trough.

 

[samcraig]

Tim Cook said Apple would build some PCs here months ago, long before these hearings were scheduled.

Indeed. Just like they started giving dividends before the hearing. Still a happy coincidence/bullet point to now be able to be included in their letter.

I am not arguing for or against here - but at the same time - something like mentioning dividends (which are very generous) only started recently. And Apple as a company has been public for how long? It's not like they've always given a dividend. And it's been a long time since a PC was built here. So - again - it's great. But that wasn't the norm

 

[Mac21ND]

As they say...

Don't hate the player. Hate the game.

 

[mrxak]

Basically Congress can't believe that there's any money anywhere in the world that they can't tax. The concept confounds them. Tim Cook I'm sure will be happy to explain things to them.

If Congress doesn't like the current tax code, they are free to change it whenever they like. It would certainly be more productive towards that aim than calling law-abiding companies like Apple to pointless hearings.

All I can figure is that somebody is trying to make their career with a few witty soundbites to the press, so they can run ads in their next campaign about how they went after corporations for their tax practices. That's really the only reason to have these hearings, because Apple sure isn't doing anything any rational person would think is wrong.

Apple would be taken to court by shareholders if they paid more taxes than they owed. Congress begging Apple for more money isn't going to accomplish anything.