Two U.S. senators have sponsored a bill that would make it easier for companies like Apple to bring the cash they are keeping overseas into the United States. Currently, U.S. companies that repatriate their foreign earnings are taxed at 35%. The new bill, sponsored by Senators Barbara Boxer and Rand Paul, is called the Invest in Transportation Act of 2015 and would see these companies taxed at a much lower rate
After the European Commission said it was investigating Apple for its tax arrangements with Ireland in June, Irish Finance Minister Michael Noonan said Friday that he expects the case to be dropped. Noonan's comments were made in Brussels, and he said that the EU doesn't have a strong case.
European Union regulators have announced in a preliminary ruling that the tax deals brokered between Apple and the Irish government may be constituted as illegal state aid, which would result in hefty fines in back taxes for the Cupertino giant. The deals in question were agreed upon in 1991 and 2007, and the EU Commission believes that these deals allow Apple to pay a much lower tax rate than normal.
The European Union is apparently set to accuse Apple of taking illegal tax aid from Ireland. The aid allegedly came in the form of sweetheart deals that resulted in a much lower tax rate. Apple currently enjoys a very low tax rate in Ireland, and the company says that no laws were broken in their deal with Ireland, where it's been operating for more than thirty years, according to the Financial Times:
Ahead of the testimony it will be giving before the U.S. Senate tomorrow, Apple (via The Loop) offered up a nicely detailed 17-page PDF document with all sorts of good information inside. The most interesting number is this: Apple pays $1 out of every $40 of income tax collected by the US Treasury. Isn’t it incredible to think that one company is responsible for 2.5% of all US income tax collection?
It’s quite popular for people reporting on Apple’s financial position to quote the absurdly high level of cash the company holds on its balance sheet. At the end of last quarter the $145 billion is more than a rainy day fund, which is why the board of directors approved a massive stock buyback and dividend hike. Of course Apple won’t be using much of its cash to do this. Instead, it raised debt. Why? Because so much of the cash -- about $102 billion -- is not on US soil. Instead this money is held in other countries.
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Each year Apple -- an many, many other tech companies -- manages to avoid billions in corporate taxes around the world and across the U.S. They do this by setting up offices and funneling money to tax-friendly places like Ireland and Reno, Nevada. Even though Apple's corporate headquarters is in Cupertino, California, having offices to collect profits and invest money in countries and state with little or no corporate tax, they legally hang on to vast amounts of profit each year.
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