Ireland's Appeal to Apple
When Apple CEO Tim Cook testifies today before a congressional panel that's examining how companies use various maneuvers to cut their tax bills, here's a number to keep in mind: 2 percent.
Actually, less than that.
That's the tax rate that Apple negotiated for its subsidiaries in Ireland, according to a report by the Senate Permanent Subcommittee on Investigations, which found that the technology giant's offshore entities in that country paid little or no taxes in recent years.
The number is important is because companies will often argue that they shouldn't have to pay the U.S. corporate tax rate of 35 percent on money earned abroad since it's already been taxed in the foreign market. Indeed, Cook wrote in prepared testimony to Congress that Apple's subsidiaries pay all taxes as required by Ireland. But missing from the equation was the tax rate.
Now we know.
The stakes are huge for the world's most valuable technology company, which has $102 billion in offshore accounts.
In its prepared remarks, Apple said it doesn’t use “tax gimmicks,” such as moving intellectual property into offshore havens, or hold money on a “Caribbean island” to lower tax bills. Apple said it has a large amount of foreign cash because 61 percent of its sales last year came from outside the U.S.
We'll find out this morning how convincing Apple's arguments are.