Thursday November 26th, 2015 7:59PM

Apple paid only 1.9 pct tax on earnings outside US

By The Associated Press
Apple Inc. paid an income tax rate of only 1.9 percent on its earnings outside the U.S. in its latest fiscal year, a regulatory filing by the company shows.

The world's most valuable company paid $713 million in tax on foreign earnings of $36.8 billion in the fiscal year ended Sept. 29, according to the financial statement filed on Oct. 31. The foreign earnings were up 53 percent from fiscal 2011, when Apple earned $24 billion outside the U.S. and paid income tax of 2.5 percent on it.

The tech giant's foreign tax rate compares with the general U.S. corporate tax rate of 35 percent.

Apple may pay some income taxes on its profit to the country in which it sells its products, but it minimizes them by using various accounting moves to shift profits to countries with low tax rates. For example the strategy known as "Double Irish With a Dutch Sandwich," routes profits through Irish and Dutch subsidiaries and then to the Caribbean.

Other multinational corporations also use such tax techniques, which are legal.

Like other big companies, Apple leaves cash overseas. If it brought it home to the U.S., it would have to pay U.S. corporate taxes on the money. The cash that Apple has left overseas as of Sept. 29 has mounted to a stunning $82.6 billion, up from $74 billion as of June 30.

Where Apple does differ from other companies is that it sets aside a portion of the foreign profits, marking them as subject to U.S. taxes sometime in the future.

When Apple reports quarterly results, it records that portion of the taxes as a liability, which is subtracted from its profits even though it hasn't actually paid the taxes.

Tax experts say the company could easily eliminate these "phantom" tax obligations. That would boost Apple's profits for the past three years by as much $10.5 billion, according to calculations by The Associated Press reported in July.

While investors might rejoice if Apple suddenly added $10.5 billion to its profits, unilaterally erasing a massive U.S. tax obligation could tarnish its reputation as a relatively responsible payer of U.S. taxes. Instead, the company is lobbying to change U.S. law so that it can erase its liabilities in a less conspicuous fashion.

Overall Cupertino, Calif.-based Apple had net income of $41.7 billion, or $44.15 per share, in fiscal 2012. That was up 61 percent from $25.9 billion, or $27.68 per share, in fiscal 2011.
  • Associated Categories: U.S. News, Business News
© Copyright 2015
All rights reserved. This material may not be published, broadcast, rewritten, or redistributed without permission.
Doctors: Blood clot located in Clinton's head
Secretary of State Hillary Rodham Clinton developed a blood clot in her head but did not suffer a stroke or neurological damage, her doctors said Monday. They say they are confident that she will make a full recovery.
3:55PM ( 2 years ago )
Illinois Sen. Kirk to return a year after stroke
Nearly a year after a stroke left him barely able to move the left side of his body, U.S. Sen. Mark Kirk is expected to climb the 45 steps to the Senate's front door this week - a walk that's significant not just for Illinois' junior senator, but also for medical researchers and hundreds of thousands of stroke patients.
3:54PM ( 2 years ago )
U.S. News
Ga. ethics legislation could end free tickets
General Assembly approval next year of a proposed ethics reform measure could endanger an important fall tradition for Georgia lawmakers - free football tickets.
6:26PM ( 2 years ago )
Abortion restrictions, tax changes loom in Ga.
Tax breaks for manufacturers and higher unemployment taxes for employers take effect with the new year in Georgia, but it remains to be seen whether the state's newest abortion restrictions will be enforced.
6:23PM ( 2 years ago )
Business News
White House undergoes Thanksgiving Day lockdown after man draped in American flag jumps fence
WASHINGTON (AP) — A man draped in an American flag climbed over the fence at the White House on Thursday, prompting a lockdown as the first family celebrated Thanksgiving.The man was immediately appre...
6:28PM ( 1 hour ago )
Obama grants reprieve to turkeys 'Honest' and 'Abe' during White House ceremony
WASHINGTON (AP) — President Barack Obama spared two turkeys named for one of the nation's most admired presidents, continuing a White House tradition that provides a refreshing sense of amusement and...
9:18PM ( 22 hours ago )
The Latest: UN Security Council strongly condemns 'horrifying' attack in Mali, urges probe
BAMAKO, Mali (AP) — The latest on the attack on a hotel in the Malian capital of Bamako. (All times local):___4:55 a.m.The U.N. Security Council is condemning "the horrifying terrorist attack" at the...
10:58PM ( 5 days ago )
World leaders vow vigorous response to Paris terror spree, but little indication of next steps
ANTALYA, Turkey (AP) — World leaders vowed a vigorous response to the Islamic State group's terror spree in Paris as they opened a two-day meeting in Turkey on Sunday, with President Barack Obama call...
2:14PM ( 1 week ago )
Rash of E. coli cases in Pacific Northwest highlights problem of foodborne illnesses
SEATTLE (AP) — As Chipotle prepares to reopen its restaurants in the Pacific Northwest this week after an E. coli outbreak that sickened about 45 people, health experts say foodborne illnesses are mor...
1:40AM ( 2 weeks ago )