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Apple's tax strategy
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Apple's tax strategy
by Misor Mon Apr 30, 2012 7:26 pm
Today I read an article about how Apple manage to reduce its contributions in taxes.
Here is a extract from the New York Times:
Here the complete piece of news: http://www.nytimes.com/2012/04/29/business/apples-tax-strategy-aims-at-low-tax-states-and-nations.html
So, what do you think about this strategies they are using?
Here is a extract from the New York Times:
- Spoiler:
- Apple, the world’s most profitable technology company, doesn’t design iPhones here. It doesn’t run AppleCare customer service from this city. And it doesn’t manufacture MacBooks or iPads anywhere nearby.
Yet, with a handful of employees in a small office here in Reno, Apple has done something central to its corporate strategy: it has avoided millions of dollars in taxes in California and 20 other states.
Apple’s headquarters are in Cupertino, Calif. By putting an office in Reno, just 200 miles away, to collect and invest the company’s profits, Apple sidesteps state income taxes on some of those gains.
California’s corporate tax rate is 8.84 percent. Nevada’s? Zero.
Setting up an office in Reno is just one of many legal methods Apple uses to reduce its worldwide tax bill by billions of dollars each year. As it has in Nevada, Apple has created subsidiaries in low-tax places like Ireland, the Netherlands, Luxembourg and the British Virgin Islands — some little more than a letterbox or an anonymous office — that help cut the taxes it pays around the world.
Almost every major corporation tries to minimize its taxes, of course. For Apple, the savings are especially alluring because the company’s profits are so high. Wall Street analysts predict Apple could earn up to $45.6 billion in its current fiscal year — which would be a record for any American business.
Apple serves as a window on how technology giants have taken advantage of tax codes written for an industrial age and ill suited to today’s digital economy. Some profits at companies like Apple, Google, Amazon, Hewlett-Packard and Microsoft derive not from physical goods but from royalties on intellectual property, like the patents on software that makes devices work. Other times, the products themselves are digital, like downloaded songs. It is much easier for businesses with royalties and digital products to move profits to low-tax countries than it is, say, for grocery stores or automakers. A downloaded application, unlike a car, can be sold from anywhere.
The growing digital economy presents a conundrum for lawmakers overseeing corporate taxation: although technology is now one of the nation’s largest and most valued industries, many tech companies are among the least taxed, according to government and corporate data. Over the last two years, the 71 technology companies in the Standard & Poor’s 500-stock index — including Apple, Google, Yahoo and Dell — reported paying worldwide cash taxes at a rate that, on average, was a third less than other S.& P. companies’. (Cash taxes may include payments for multiple years.)
Even among tech companies, Apple’s rates are low. And while the company has remade industries, ignited economic growth and delighted customers, it has also devised corporate strategies that take advantage of gaps in the tax code, according to former executives who helped create those strategies.
Apple, for instance, was among the first tech companies to designate overseas salespeople in high-tax countries in a manner that allowed them to sell on behalf of low-tax subsidiaries on other continents, sidestepping income taxes, according to former executives. Apple was a pioneer of an accounting technique known as the “Double Irish With a Dutch Sandwich,” which reduces taxes by routing profits through Irish subsidiaries and the Netherlands and then to the Caribbean. Today, that tactic is used by hundreds of other corporations — some of which directly imitated Apple’s methods, say accountants at those companies.
Without such tactics, Apple’s federal tax bill in the United States most likely would have been $2.4 billion higher last year, according to a recent study by a former Treasury Department economist, Martin A. Sullivan. As it stands, the company paid cash taxes of $3.3 billion around the world on its reported profits of $34.2 billion last year, a tax rate of 9.8 percent. (Apple does not disclose what portion of those payments was in the United States, or what portion is assigned to previous or future years.)
By comparison, Wal-Mart last year paid worldwide cash taxes of $5.9 billion on its booked profits of $24.4 billion, a tax rate of 24 percent, which is about average for non-tech companies.
Here the complete piece of news: http://www.nytimes.com/2012/04/29/business/apples-tax-strategy-aims-at-low-tax-states-and-nations.html
So, what do you think about this strategies they are using?
Misor- Admin
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Re: Apple's tax strategy
by Cereal Killer Tue May 01, 2012 5:15 pm
Apple is not the only company that steals their country by omitting taxes but the number in the article is terrible, large companies don't only plan how to be more successful but also how to save money and skip taxes and stop paying their workers' welfare.
We can disagree with apple, and the best way to do it is by stopping buying their products as a way to protest against the criminal act of not paying taxes and abusing their employees.
However while people criticize companies like apple they are addicted to buying and consuming their products, so this situation will never end.
We can disagree with apple, and the best way to do it is by stopping buying their products as a way to protest against the criminal act of not paying taxes and abusing their employees.
However while people criticize companies like apple they are addicted to buying and consuming their products, so this situation will never end.
Cereal Killer- Content Poster
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Re: Apple's tax strategy
by Anita Tue May 01, 2012 8:09 pm
No surprise, really. As Andy said, multinationals and giants's hobbies are ditching taxes and keeping sheep buying their products. 
I totally agree, Andy, you couldn't have said that any better!!! I love technology as you can't imagine, but I've refrained from buying Apple products as a pacific protest against this and more facts (check the other thread). But only a half person out of 10 would do so, just because we're focused on our own interest only. People don't understand how serious it is that taxes are not paid.
In Latin America, many companies that became trustees and partners of European countries avoided not only taxes, but also social welfare debts with their employees. Yet, they never forget to charge perks in order to magnify their profit. Sadly, these fat cat's greed is the factor which doesn't let countries in Latin America and Asia advance.
Oh, Apple...
Cereal Killer wrote:We can disagree with apple, and the best way to do it is by stopping buying their products as a way to protest against the criminal act of not paying taxes and abusing their employees.
However while people criticize companies like apple they are addicted to buying and consuming their products, so this situation will never end.
I totally agree, Andy, you couldn't have said that any better!!! I love technology as you can't imagine, but I've refrained from buying Apple products as a pacific protest against this and more facts (check the other thread). But only a half person out of 10 would do so, just because we're focused on our own interest only. People don't understand how serious it is that taxes are not paid. In Latin America, many companies that became trustees and partners of European countries avoided not only taxes, but also social welfare debts with their employees. Yet, they never forget to charge perks in order to magnify their profit. Sadly, these fat cat's greed is the factor which doesn't let countries in Latin America and Asia advance.
Oh, Apple...
Anita- Co-Admin
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Re: Apple's tax strategy
by Misor Wed May 02, 2012 7:08 pm
I totally agree with you two. Companies should be responsible and pay all the taxes they are supposed to pay.
But, what do you think of one of the enterprisers reasons for avoiding taxes here in Colombia: I prefer not to pay taxes instead of paying them when I know many of them are stolen by government officers?
But, what do you think of one of the enterprisers reasons for avoiding taxes here in Colombia: I prefer not to pay taxes instead of paying them when I know many of them are stolen by government officers?
Misor- Admin
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Re: Apple's tax strategy
by Anita Sat May 05, 2012 4:43 pm
That's a good but sensitive point, Jose: I understand it's utterly disappointing and upsetting to see how they steal, waste and disappear the money we invest by paying our taxes - it goes without saying that Colombia is one of the countries with the highest tax rates in the world. Yet, we can't be negligent and irresponsible, mainly when knowing that, sadly, we'll make us pay the debt anyway, even by prison punishment or even an official ban. It reminds me of the words in the Bible, Mark 12:17 (King James Version)
And Jesus answering said unto them, render to Caesar the things that are Caesar's, and to God the things that are God's.
We can't refrain from completing our duties as citizens, even despite knowing what they'll do with our money. That's why I think that these companies' actions are really reproachable, the way we are affected by the leak of all that money is scandalous!
How to solve corruption issues is another long story.
This life won't be enough... 
And Jesus answering said unto them, render to Caesar the things that are Caesar's, and to God the things that are God's.
We can't refrain from completing our duties as citizens, even despite knowing what they'll do with our money. That's why I think that these companies' actions are really reproachable, the way we are affected by the leak of all that money is scandalous!
How to solve corruption issues is another long story.
This life won't be enough...
Anita- Co-Admin
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Age : 40
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Country : E4F! Gifts :
Re: Apple's tax strategy
by MusicElf Sun May 06, 2012 2:54 pm
Stingy criminals!!!
But these wouldn't do that if the government weren't their accomplices. And they don't punish them because they also obtain benefits as individuals. I hate Apple because of that, and I will never buy an Apple product. First, they exploit their workers, then they earn a gross bunch of money, and they don't pay their local taxes? Go to hell, Apple!!!!
But these wouldn't do that if the government weren't their accomplices. And they don't punish them because they also obtain benefits as individuals. I hate Apple because of that, and I will never buy an Apple product. First, they exploit their workers, then they earn a gross bunch of money, and they don't pay their local taxes? Go to hell, Apple!!!!
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