Make Apple, er, America Great Again: iGiant to bring home profits, pay $38bn in repatriation tax Apple announced today it will start to repatriate back to America some of the massive profits it accumulated outside the USA – and will use the cash to Make America Great Again. We’re using the Trump catchphrase because Apple’s action is only possible thanks to the new tax arrangements that the US president campaigned on, …
I do agree with the sentiment, and I also get very angry when these hugely profitable monsters come cap in hand to taxpayers wanting more and more help because they create jobs (allegedly).
It does seem odd that Uncle Sam want them to pay tax when they've already paid tax somewhere else, even if it's not much.
As far as I'm aware there are such things as tax credits.
America has always double-taxed things. They basically don't care what the outside world taxed you, they will tax you too.
Many dual-citizenship people find this out - pay US taxes while living abroad, or give up the US status. It's a very common dilemma. Even if you use certain credits to not have to pay the US tax, you still have to fill out all the US tax forms to claim that even if you haven't lived there for decades. I don't know of another country that does that.
If you want to renounce your US citizenship, you will have to pay a fee and possibly an exit tax - which may be applicable even if you simply had a green card.
And UK banks (amongst many others) are obliged to assist the US treasury in enforcing their taxation rules.
If you're a US citizen, and you live in the UK (for example), you probably won't have to pay US taxes because you're already paying higher UK taxes, but you will have to prove to the US tax authorities that you are indeed paying those UK taxes. Of course, the US has a tax system from the last century so you'll have to fill out all those forms yourself (or pay someone else to do it for you, which is the intention of keeping it so manual).
As others have pointed out, no other country will try and tax you on income you made elsewhere, one of my friends has never taken up his duel US citizenship because of this.
They pay taxes as, when and where required. If tax situations allow the Double Dutch Irish Sandwich to exist, then that's a problem for the Netherlands and Ireland to resolve. The Dutch know this, they are not happy about it (well, the citizens aren't by the tone of the conversations I had in Amsterdam last night), and thus it continues to be a problem. Ireland also knows they have to resolve this (and they have).
The American model allowed 'deferred taxes' to exist, so the cash pile just grew and grew and grew. If they ('deferred taxes') couldn't exist, the $250 billion cash pile wouldn't exist either.
I think you missed the part stating that they had already paid the tax in the jurisdiction where they had the money. It is not double taxed. The issue is that the US corporate tax is much higher, one of the highest anywhere. They get a credit for what they pay elsewhere, but they still owe the difference. While they technically owed the difference anyway, they could have what they owe deferred (indefinitely) until they actually brought it back (repatriated it). Since it was over a 35% tax rate, they left it offshore and deferred for many years. The new tax code allows them a one-time tax break to repatriate the cash for cheap, relatively speaking.
So is it a tax break for Apple? Technically, yes, but in practice the US government is getting $38 billion instead of zero. Seems like a good deal to me. 15% of hundreds of billions is much more tax than 35% of nothing.
Just goes to show that the debate about "muh tax leeches" is a completely wrong one: US government always spend more than there are.
That's 3.8% of Obama-Hillary useless "nuke from planes" program btw (first estimation). Trump's "small nukes to bust a city or two" program has not seen its cost estimated yet.
Then, the Trump-friendly tax reform bill passed late last year offering a one-off discount rate of 15.5 per cent for repatriated profits.
Compare to their single digital corporate tax by leaving the profit outside, it doesn't feel like Apple will bring 'all' of their profit back to USA.
If you think like a multi-international Apple guy (Tim Cook?), bring 'all' profit back doesn't give much benefit unless you really need USA stuff. The factories and everything are outside, so the profit outside can be used to continue manufacturing iPhone without getting taxed by the USA, which saves 15.5 percent in cost. So unless Apple guy want more USA designers, USA Apple campuses, USA Apple servers, or USA Apple buildings, there are little reasons they would bring all the profit back. Even when you look at it in another direction, if Apple sold an iPhone in Singapore, it's profit in Singapore that is taxed in Singapore and can be reinvested in Singapore. Why would you bring it back and get taxed 15.5 percent?
According to Donald 'lets tweet' Trump, he's going to make america great again (MAGA). He said that he's going to 'fix' the infrastructure (roads etc). ROFL
A report a few years ago said that of every 100$ dished out by DC for infrastructure $48 was spent on Lawyers, 30$ spent in the state governments leaving a miserly $32 to be spent on the ground.
That Apple tax take won't go very far if that new metro tunnel in NYC is anything to go by as it costs $3.1B/mile.
The sums are mindboggling. Carillion was a minnow at this game when compared to the Yanks.
Why would you bring it back and get taxed 15.5 percent?
Because it is running out of options to be taxed less. There is only a handful of non-tax heaven countries with rates under 15. In the Eu it is just Bulgaria and Hungary.
Combined PR + political move too. Tim Cook is a very political animal. He has just bought the service of Uncle Sam's diplomatic attack dogs without actually paying more than he should have paid to start off with in Ireland. While before, US authorities were helping other countries trace what Apple is doing (Eu investigation started as a result of reading the notes from questioning Tim by Congress). Now, not so much.
"There is only a handful of non-tax heaven countries with rates under 15. In the Eu it is just Bulgaria and Hungary."
Just wait until the UK is out of the EU. If the local business tax take sinks low enough becoming a tax haven will be a viable proposition.
"Just wait until the UK is out of the EU. If the local business tax take sinks low enough becoming a tax haven will be a viable proposition"
Whilst I do think UK can do quite well for itself outside of EU control, I don't think we want to be starting a trade war.
"So unless Apple guy want more USA designers, USA Apple campuses, USA Apple servers, or USA Apple buildings, there are little reasons they would bring all the profit back."
Surely all these things you list are expenses which would be set against tax. Paying out money in this way reduces profits on which the tax is due. The reason to bring back profits is to pay dividends. In the past Apple has borrowed money to pay dividends. Now they can repay those loans. They'll have time-shifted the tax liabilities on the profits distributed as dividends from the past, when the tax would have been higher, to the present.
It's a US company with (mostly) US shareholders. They make things people like to buy and sell them all over the world at a profit. They pay local sales and other taxes (VAT, business rates on their shops, salaries, tax and NI on local employees, and so on), but the profit goes back to their owners and is taxed where the company is registered. What's the story here?
The only anomaly is that for years US corporation tax rates were widely regarded as uncompetitively high (nearly twice the rate in the UK, for example) and they've been talking about reforming the system for decades. Apple, in common with most other US corporations with signficant overseas earnings, temporarily kept their overseas revenues in a holding bin waiting for the date of the much promised reform so they could finally repatriate the earnings where they belong. That day has now come.
"The recipients and their families when they use the income to buy stuff."
They use their net income to buy stuff - net after the tax has been deducted by the employer (in this case Apple) and passed on to the tax office. That was the point I was making - tax on income is a tax paid by the employee, not the employer.
The person I was replying to seemed to suggest it was a tax paid by Apple. It isn't - they're just collecting it from the employee and handing it over.
Wait, what? Who pays VAT? Who pays tax on wages and salaries?
Are you being deliberately obtuse? There is a 20% tax on turnover on EVERYTHING Apple sells in the UK. It's called VAT. And they have Apple Stores and other back off office staff, so they employ lots of staff in the UK, all subject to national insurance and so on. So Apple's UK operations pay UK tax. And the profit goes back to where the parent company is registered subject to US corporation tax.
"There is a 20% tax on turnover on EVERYTHING Apple sells in the UK. It's called VAT."
VAT is not a "20% tax on turnover".
It is a tax added to the price of the goods or services and is ultimately paid by the consumer. The company is merely collecting it from the end customer, and hands it over minus any VAT they themselves have paid on allowable goods or services they have purchased along the way.
"so they employ lots of staff in the UK, all subject to national insurance and so on."
They pay employers' national insurance contributions, yes - but that isn't a tax on the company, as such. However: "and so on"? You originally claimed they paid "tax and NI on local employees." The tax is deducted FROM the employees wages and salaries (along with the employees' own NI contributions). Apple isn't paying anything here (other than the ers' contribution as I said) - just like with the VAT, they are merely collecting it, this time from the employees, and then handing it over to the tax man.
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