Apple boss expects to repatriate billions to the US next year

Revelation that tech firm will pay deferred taxes to US Treasury follows Tim Cook’s previous refusal to support such a move

Apple boss Tim Cook expects the iPhone maker to repatriate huge offshore profits to America next year, paying billions of dollars in deferred taxes to the US Treasury.

In an interview with RTE radio, he gave a summary of the company’s 2014 tax affairs, saying: “We paid $400m [in tax] to Ireland, we paid $400m to the US. And we provisioned several billion for the US for payment as soon as we repatriated.

“Right now I would forecast that we repatriate next year. So it is not true that we would pay just $400m, or even just $800m, the number is materially larger.”

Tim Cook.
Tim Cook. Photograph: Niall Carson/PA

The revelation that Apple plans to repatriate some of its offshore profits and pay its huge US tax bills next year comes as a surprise given Cook’s previous refusal to countenance such a move.

Like many large US multinationals, Apple has for decades been pooling its non-US profits outside of America. Under loopholes in the tax laws, corporations can defer US taxes continually so long as income is not repatriated to America.

In July, Apple told investors its cash pile held offshore had reached $214.8bn (£162.2bn). This is the largest of any US company.

Cook’s surprise U-turn on repatriating foreign profits comes days after Apple was accused by competition regulators at the European commission of receiving state aid from Ireland.

Why Apple is facing a €13bn tax bill in Ireland

The commission said billions of income had been allowed to pass through Apple’s Irish-registered companies untaxed. Both Apple and Ireland have insisted they will appeal against the decision. Meanwhile, some politicians in the US have described it as a political attack.

Until now, Cook had consistently said Apple would not repatriate profits to the US until Washington slashed the US tax rate.

Last December, in an interview for US television programme 60 Minutes, Cook said he would “love to” repatriate Apple’s offshore cash. Asked why he doesn’t, he said: “Because it would cost me 40% to bring it home. And I don’t think that’s a reasonable thing to do.”

He then attacked the US corporate tax regime, saying: “This is a tax code made for the industrial age, not the digital age. It’s backwards, it’s awful for America. It should have been fixed many years ago. It is past time to get it done.”

In its annual report, Apple does make large provisions for US taxes, which allows it to claim that it has an effective tax rate of 26% – much higher than many other tech firms.

However, behind these accounting provisions Apple has made clear it does not intend to repatriate funds and actually pay the taxes provisioned for while the US maintains its current high tax rate. For that reason, the group’s reported tax rate is regarded by experts as an accounting fiction.

The US has a federal tax rate of 35% on corporate profits – one of the highest in the world– on top of which businesses can end up paying an additional sum of about 5% in local state taxes.

In reality, loopholes in the US tax code allow American multinationals to aggressively defer tax payments so long as any income earned outside the US is kept offshore. That allows many companies, particularly tech firms, to achieve some of the lowest effective tax rates in the world.


Simon Bowers

The GuardianTramp

Related Content

Article image
'Political crap': Tim Cook condemns Apple tax ruling
Chief executive criticises EU’s imposition of €13bn back tax bill and accuses authorities of ‘picking on’ Ireland

Julia Kollewe

01, Sep, 2016 @7:21 AM

Article image
Apple chief calls on US government to slash US corporate tax

Tim Cook warns Congress that he would refuse to repatriate $100bn stashed offshore unless US severely reduced its 35% tax rate

Dan Roberts and Dominic Rushe

21, May, 2013 @7:20 PM

Article image
Apple boss Tim Cook was paid nearly $100m last year, filings show
Figure represents a 570% increase on previous year, and was 1,447 times the average Apple employee’s pay

Rupert Neate Wealth correspondent

07, Jan, 2022 @2:10 PM

Article image
Has Apple really started to rot? | Nils Pratley on Saturday

Apple's recent results may have disappointed analysts, but surely it is too soon to declare the company is ex-growth

Nils Pratley

25, Jan, 2013 @7:01 PM

Article image
Tough talk on tax means nothing if every country does different things

Business leader: President Obama and George Osborne have been quick to promise an end to avoidance. But this is best achieved through collective action

04, Oct, 2014 @11:05 PM

Article image
Time for Apple to open up the MacBooks
Tim Cook has branded the EU demand for €13bn in back taxes as ‘political crap’ but some Apple customers might want a fuller explanation of its tax planning

Nils Pratley

01, Sep, 2016 @7:23 PM

Article image
Irish government split over immediate appeal against Apple tax bill
Cabinet meets amid divisions as to correct response to European commission ruling ordering company to pay back €13bn

Henry McDonald in Dublin and agencies

31, Aug, 2016 @5:58 PM

Article image
Apple ordered to pay up to €13bn after EU rules Ireland broke state aid laws
European commission says Apple got illegal help with tax breaks but CEO Tim Cook says ruling threatens investment in Europe

Sean Farrell and Henry McDonald

30, Aug, 2016 @2:33 PM

Article image
Why should Apple have access to consumers if it refuses to pay its fair share of taxes?

Robert Reich: Countries are competing to provide the biggest tax breaks, the cheapest labour and the easiest regulation to attract the likes of Google, Apple and Amazon, to the disadvantage of their own citizens. But there is another way

Robert Reich

25, May, 2013 @11:03 PM

Article image
The Apple tax ruling – what this means for Ireland, tax and multinationals
Why must Apple repay Ireland €13bn in back taxes? And will this make multinationals more transparent in their tax affairs? Find out here …

Simon Bowers

30, Aug, 2016 @11:47 AM