Apple paid less than 2 percent tax on earnings outside U.S.
Apple Inc. paid an income tax rate of only 1.9 percent on its earnings outside the U.S. in its latest fiscal year, a regulatory filing by the company shows.
The world's most valuable company paid $713 million in tax on foreign earnings of $36.8 billion in the fiscal year ended Sept. 29, according to the financial statement filed on Oct. 31. The foreign earnings were up 53 percent from fiscal 2011, when Apple earned $24 billion outside the U.S. and paid income tax of 2.5 percent on it.
The tech giant's foreign tax rate compares with the general U.S. corporate tax rate of 35 percent.
Apple may pay some income taxes on its profit to the country in which it sells its products, but it minimizes them by using various accounting moves to shift profits to countries with low tax rates. For example the strategy known as "Double Irish With a Dutch Sandwich," routes profits through Irish and Dutch subsidiaries and then to the Caribbean.
Other multinational corporations also use such tax techniques, which are legal.
Like other big companies, Apple leaves cash overseas. If it brought it home to the U.S., it would have to pay U.S. corporate taxes on the money. The cash that Apple has left overseas as of Sept. 29 has mounted to a stunning $82.6 billion, up from $74 billion as of June 30.
Where Apple does differ from other companies is that it sets aside a portion of the foreign profits, marking them as subject to U.S. taxes sometime in the future.
When Apple reports quarterly results, it records that portion of the taxes as a liability, which is subtracted from its profits even though it hasn't actually paid the taxes.
Tax experts say the company could easily eliminate these "phantom" tax obligations. That would boost Apple's profits for the past three years by as much $10.5 billion, according to calculations by The Associated Press reported in July.
While investors might rejoice if Apple suddenly added $10.5 billion to its profits, unilaterally erasing a massive U.S. tax obligation could tarnish its reputation as a relatively responsible payer of U.S. taxes. Instead, the company is lobbying to change U.S. law so that it can erase its liabilities in a less conspicuous fashion.
Overall Cupertino, Calif.-based Apple had net income of $41.7 billion, or $44.15 per share, in fiscal 2012. That was up 61 percent from $25.9 billion, or $27.68 per share, in fiscal 2011.
The world's most valuable company paid $713 million in tax on foreign earnings of $36.8 billion in the fiscal year ended Sept. 29, according to the financial statement filed on Oct. 31. The foreign earnings were up 53 percent from fiscal 2011, when Apple earned $24 billion outside the U.S. and paid income tax of 2.5 percent on it.
The tech giant's foreign tax rate compares with the general U.S. corporate tax rate of 35 percent.
Apple may pay some income taxes on its profit to the country in which it sells its products, but it minimizes them by using various accounting moves to shift profits to countries with low tax rates. For example the strategy known as "Double Irish With a Dutch Sandwich," routes profits through Irish and Dutch subsidiaries and then to the Caribbean.
Other multinational corporations also use such tax techniques, which are legal.
Like other big companies, Apple leaves cash overseas. If it brought it home to the U.S., it would have to pay U.S. corporate taxes on the money. The cash that Apple has left overseas as of Sept. 29 has mounted to a stunning $82.6 billion, up from $74 billion as of June 30.
Where Apple does differ from other companies is that it sets aside a portion of the foreign profits, marking them as subject to U.S. taxes sometime in the future.
When Apple reports quarterly results, it records that portion of the taxes as a liability, which is subtracted from its profits even though it hasn't actually paid the taxes.
Tax experts say the company could easily eliminate these "phantom" tax obligations. That would boost Apple's profits for the past three years by as much $10.5 billion, according to calculations by The Associated Press reported in July.
While investors might rejoice if Apple suddenly added $10.5 billion to its profits, unilaterally erasing a massive U.S. tax obligation could tarnish its reputation as a relatively responsible payer of U.S. taxes. Instead, the company is lobbying to change U.S. law so that it can erase its liabilities in a less conspicuous fashion.
Overall Cupertino, Calif.-based Apple had net income of $41.7 billion, or $44.15 per share, in fiscal 2012. That was up 61 percent from $25.9 billion, or $27.68 per share, in fiscal 2011.
It's time that Apple pays a more appropriate share of those profits in the form of a tax. The taxable amounts could certainly go towards the US economy, and paying down the debt.
Under Mittens plan they wouldn't pay anything on those overseas earnings.
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We do need to lower the US corporate tax rate and modify the code to something more fair for earnings inside and outside the US, everyone knows this will never happen right? Corporations enjoy finding ways around the current tax codes.
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"The tech giant's foreign tax rate compares with the general U.S. corporate tax rate of 35 percent."
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This is another reason to like Apple. They know how to make a profit by avoiding the high US taxes.
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The US has priced themselves out of the market and companies are leaving the US for foreign shores where companies are welcome and have low government regulations, low taxes, no unions and low wages (which are high for the country but very low compared to US wages).
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Expect to see more of this as time goes on. Just the other day the EPA was set to release some of the new regulations that will hurt US businesses and drive out more companies.
 @RalphCramden If you think that's great then you and these companies obviously hate this country and it's people. No exceptions. Man I'm glad Obama's going to win. I'd like to shove your greed right up your...
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Public companies have no allegiance to any nation or government. They serve the stockholders and as long as they can make money legally then they serve the stockholders well.
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I retired early thanks to Apple because I bought thousands of shares  of stock at $12 a share. It splint several times and because of their success, I am successful.
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What you don't get is simple economics. Apple is competing with companies outside the US that pay a lot less in a labor, supplies, taxes and have way less regulations that in the US are very costly. Apple did what it needed to be competitive in the world market and did it very well.
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If 0bama wins, expect to see more companies leaving the US because there are tons of regulations in place that will come in to play after the election. The US is doomed to massive failure and while you will suffer significant economic repercussions those of us who are planning ahead will do just fine.
 @pdxdÂ
As an Apple stock holder I just want the maximum profits from my investment. If that includes moving overseas then so be it. It's all about competition and making a profit also includes cutting costs (reducing tax exposure, reducing labor costs, reducing energy costs and so on).
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When I had my businesses during the recession of 79-83 profits were razor thin and the way I increased profit was to cut costs. Cutting costs included laying off non essential workers. If I could have moved to another country to save overhead I would have done that in a heartbeat. Unfortunately Clinton had not signed NAFTA or GATT into law at the time so there was no advantage to moving overseas.
 @RalphCramden Considering that Apple is a "premium brand", if they ended up charging slightly more as a result of paying their fair share of US taxes, they'd still end up pocketing money, because Apple is an aspirational brand. Much in the same as BMW/Mercedes/Lexus are aspirational brands and have thrived in recent years. No doubt, economics is a topic that we will no doubt continue to disagree on.
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You know Ralph part of that 33% Apple would pay had they kept their company in the US helps protect them from the intellectual property theft they are felling all over the world.
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Korea, China and even Japan have a great deal to gain in corporate theft of Apple's intellectual property.
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Notice that in China they aren't even bothering to sue anyone? And I bought 4 "iPads" from a Chinese importer and they are exact replicas of iPads I paid $200 for (each).
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So Apple keeps their rates low, and ends up paying millions in court fees and litigation just to lose (like in the UK, Korea and Japan) to Samsung.
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They haven't even bothered to sue the knockoff people from China, because China would not bother to lift a finger to help them.
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You get what you pay for, and that applies to taxes as well.
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 @RepomanÂ
Considering that Apple makes some of the best consumer electronics products on the market today and is the worlds largest company in history in capital terms I would say that Apple has done something right.
This is why companies move their operations out of the US. Who wouldn't want to pay 33% less in taxes? Anyone???
@Owt_Raged Maybe because the US government protects Apple's interests including foriegn interests.
To many companies base their operations here in the US and use our legal system to protect themselves yet do everything possible to contribute as little as possible to it.The US is still the best place to do buisness and provide protections from piracy which is rampant in places like China. Now I don't think foriegn investments should be taxed at the same rate as they are here. But I do however think they should pay more then 2% in taxes.