While accounting strategies of several tech companies in the US are facing a year-long congressional inquiry, Apple issued a statement last Thursday regarding the issue. According to the Cupertino-based company, they paid $6 billion in taxes for fiscal 2012, which represents about 2.5 percent of the total corporate taxes collected.
Shifting Incomes to Offshore Tax Havens
Based on a report from The New York Times, the Senate Permanent Subcommittee on Investigations is gearing up an investigation to a number of technology companies. These corporations are said to be using specialized accounting practices to avoid US taxes.
In relation to this, Apple had become the focus of the inquiry. That’s because its accountants have managed to allocate about 70 percent of taxable income overseas despite running its base operations in the US. Although the tactics used are completely legal, Senator Carl Levin—head of the investigations committee—said that off-shoring income and intellectual property is hurting the US budget, as well as the American people.
This subcommittee has demonstrated in hearings and comprehensive reports how various schemes have helped shift income to offshore tax havens and avoid US taxes. The resulting loss of revenue is one significant cause of the budget deficit, and adds to the tax burden that ordinary Americans bear.
Senator Levin added that the ongoing investigation revealed that Apple have more than $35.4 Billion of deferred taxes between 2009 and 2011. However, the amounts that the company pays are not unsubstantial. That’s because the US government collected $3.3 Billion in cash taxes for the 2011 fiscal year.
As Apple said in a statement last Thursday, they are one of the top corporate income taxpayers in the US. They also noted that they’ve conducted all of their business “with the highest of ethical standards, complying with applicable laws and accounting laws.”
The company also pointed out that they’ve paid “an enormous amount of taxes” to local, state and federal government for the past fiscal year. According to the statement:
In fiscal 2012 we paid $6 Billion in federal corporate income taxes, which is 1 out of every 40 dollars in corporate income taxes collected by the US government.
In the 1980s, Apple created a method that routed income through subsidiaries in Ireland, the Netherlands, and the Caribbean. Meanwhile, the company is accused of sidestepping billions of dollars in taxes in the US by moving profit and investment operations to its Nevada headquarters. The move is said to effectively avoid California’s 8.84 percent state tax.