Apple CEO Cook to Propose Tax Reform for Offshore Cash
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Apple Inc. (AAPL), which holds $102 billion in cash and investments outside the U.S., will suggest changes to corporate-tax laws to encourage companies to bring more cash into the country.
In interviews with the Washington Post Co. and Politico published yesterday, Apple Chief Executive Officer Tim Cook previewed testimony he will give on May 21 before the Senate Permanent Subcommittee on Investigations, which has been examining companies that use various maneuvers to reduce their tax bills. The current 35 percent corporate-tax rate is too high for companies to pay when bringing money back from overseas, Cook was quoted as saying by the Washington Post.
Apple is facing U.S. government scrutiny after Cook unveiled a plan last month to return $100 billion in cash to shareholders via dividends and buybacks through 2015. Rather than using cash overseas that will be taxed, Apple is borrowing money for the payout, saving as much as $9.2 billion in taxes, according to Moody’s Investment Services.
Cook defended Apple’s practices and said the company doesn’t funnel domestic profits overseas, according to the interview with Politico. The committee is also looking into tax practices at other companies, including Microsoft Corp. (MSFT) and Hewlett-Packard Co. (HPQ)
Steve Dowling, a spokesman for Cupertino, California-based Apple, declined to comment beyond Cook’s interviews.
Cook said Apple wants to create more jobs in the U.S., the Washington Post reported. Apple will spend $100 million on facilities to build Mac computers in the U.S., Cook said in an interview with Bloomberg Businessweek in December. The move may result in the creation of about 200 jobs. Apple uses components made in Arizona and assembles them in Texas, according to the Washington Post interview.
At the end of its last fiscal year, Apple had $40.4 billion in cumulative earnings outside the U.S. on which it hadn’t paid U.S. taxes. If that was brought back, Apple would owe $13.8 billion, according to a filing.
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