Ondrej Holzman Representatives of Apple, led by CEO Tim Cook, participated in a hearing in the US Senate yesterday, which dealt with problems with the transfer of money by large companies abroad and possible tax evasion. American legislators wondered why the Californian company keeps more than 100 billion in cash abroad, mainly in Ireland, and does not transfer this capital to the territory of the United States...
Apple's reasons are obvious - it doesn't want to pay the high corporate income tax, which is 35% in the United States, the highest single tax rate in the world. That's why you prefer Apple decided to go into debt to pay dividends to its shareholders, rather than paying a high tax.
"We are proud to be an American company and equally proud of our contribution to the American economy," said Tim Cook in his opening speech, in which he recalled that Apple has created approximately 600 jobs in the United States and is the largest corporate tax payer in the country.
Irish apron
Senator John McCain responded to this earlier that Apple is one of the largest American tax payers, but at the same time it is one of the largest companies that avoids paying taxes to the same extent. Over the past two years, Apple should have robbed the American treasury of more than 12 billion dollars.
Cook was therefore interviewed together with Peter Oppenheier, Apple's chief financial officer, and Phillip Bullock, who takes care of the company's tax operations, precisely on the topic of tax practices abroad. Thanks to loopholes in Irish and American law, Apple did not have to pay practically any taxes abroad on its 74 billion dollar revenue (in dollars) in the last four years.
[do action=”quote”]We pay all the taxes we owe, every dollar.[/do]
The whole debate revolved around subsidiaries and holding companies in Ireland, where Apple established itself in the early 80s and now pours its profits through Apple Operations International (AOI) and two other companies without having to pay high taxes. AOI was established in Ireland, so American tax laws do not apply to it, but at the same time it is not registered as a tax resident in Ireland, so it has not submitted any taxes for at least five years. Apple representatives then explained that the Californian company had received tax benefits from Ireland in exchange for job creation in 1980, and that Apple's practices had not changed since then. The negotiated amount of tax should have been two percent, but as the numbers show, Apple pays much less in Ireland. Of the mentioned 74 billion that he earned in the past years, he paid only 10 million dollars in taxes.
"AOI is nothing more than a holding company that was created to efficiently manage our money," Cook said. "We pay all the taxes we owe, every dollar."
The United States needs tax reform
AOI reported a net profit of $2009 billion from 2012 to 30 without paying the slightest tax to any state. Apple found that if it established AOI in Ireland, but did not physically operate on the islands and run the company from the States, it would avoid taxes in both countries. So Apple is only using the possibilities of the American law, and thus the permanent investigation subcommittee of the US Senate, which investigated the whole matter, did not plan to accuse Apple of any illegal activity or punish it (similar practices are also used by other companies), but rather wanted to get incentives to cause greater debates regarding tax reform.
[do action=”citation”]Unfortunately, the tax law has not kept up with the times.[/do]
"Unfortunately, the tax law has not kept up with the times," Cook said, suggesting that the US tax system needs an overhaul. “It would be very expensive for us to transfer our money back to the United States. In this regard, we are at a disadvantage against foreign competitors, because they do not have such a problem with the movement of their capital."
Tim Cook told senators that Apple would be very happy to participate in the new tax reform and will do everything in its power to help. According to Cook, the corporate income tax should be around 20 percent, while the tax collected on repatriating the money earned should be in the single digits.
“Apple has always believed in simplicity, not complexity. And in this spirit, we recommend a fundamental revision of the existing tax system. We make such a recommendation knowing that Apple's US tax rate would likely increase. We believe such reform would be fair to all taxpayers and keep the United States competitive.”
Apple will not move from the US
Sen. Claire McCaskill, responding to the debate over lower taxes abroad and the fact that Apple is taking advantage of those benefits, raised the question of whether Apple plans to go elsewhere if taxes in the United States become unbearable. However, according to Cook, such an option is out of the question, Apple will always be an American company.
[do action=”quote”]Why the hell do I have to update apps on my iPhone all the time, why don't you fix it?[/do]
“We are a proud American company. Most of our research and development takes place in California. We're here because we love it here. We are an American company whether we sell in China, Egypt or Saudi Arabia. It never occurred to me that we would move our headquarters to another country, and I have a pretty crazy imagination.” a similar scenario was rejected by Tim Cook, who seemed calm and confident throughout most of the statement.
Several times there was even laughter in the Senate. For example, when Senator Carl Levin pulled an iPhone out of his pocket to demonstrate that Americans love iPhones and iPads, but John McCain allowed himself the biggest joke. Both McCain and Levin coincidentally spoke out against Apple. At one point, McCain went from serious to asking: "But what I really wanted to ask was why the hell do I have to update apps on my iPhone all the time, why don't you fix it?" Cook answered him: "Sir, we're always trying to improve them." (Video at the end of the article.)
Two camps
Senators Carl Levin and John McCain spoke out against Apple and tried to show its practices in the darkest light. A disgruntled Levin concluded that such behavior was "simply not right," creating two camps among American lawmakers. The latter, on the other hand, supported Apple and, like the Californian company, is interested in the new tax reform.
The most visible figure from the second camp was Senator Rand Paul of Kentucky, who is associated with the movement Tea Party. He said that the Senate should apologize to Apple during the hearing and instead look in the mirror because it is he who created such a mess in the tax system. "Show me a politician who isn't trying to cut their taxes," said Paul, who said Apple has enriched people's lives far more than politicians ever could. "If anyone should be questioned here, it's Congress," added Paul, tweeting afterwards to all the representatives present for the absurd spectacle he apologized.
[youtube id=”6YQXDQeKDlM” width=”620″ height=”350″]
Thank you, good article :)
Thanks, I'm so glad you can appreciate the effort.
HAVE FUN!
I would also like a grandfather who will keep track of the constant need to update applications. PS: Sent from iPad and I don't want to wait for diacritics
It's nice that the Apple phenomenon is also experienced by people who heavily criticize Apple in the US (they have to criticize their functions because of the title). I remember how, during the presentation of the new Apple campus, the lady from the city asked Jobs if there would be Wi-Fi for the people around, and Jobs said yes. And why? Why don't we employ so many people for 3-5 years that public taxes don't become slowly but still metropolitan access points for the public? Why should a private company replace the city and still defend it on similar committees? You know, I'll do it, I'd be very happy, and the next day I find out that I paid. No thanks. ;)
Nice comprehensive article.
"But what I really wanted to ask was why the hell do I have to update apps on my iPhone all the time, why don't you fix it?"
Cook replied, "Sir, we're always trying to improve them."
#facepalm
Nice article :-)