Tim Cook (Apple CEO)’s defense of Apple’s tax strategy
Questions/affirmations
1. Cooks hopes that the US will proceed with a CIT reform regarding the fact that the US is the
sole state which opted for deferral taxation of income earned abroad.
For Cook, a reform is in the best interest of the US because the current system gives
incentve to keep the money earned abroad outside of the US
Moreover, for him, each dollar should be taxed directly. In order to do so, there should
be free foo of capital. Such changes of the system would favor investment in the US
2. About the allegation of Apple’s tax frauds
He recalls that the income earned abroad remain subject to US CIT.
He also recalls that companies have the choice to repatriate (and pay 35% of tax plus a
weighted average across the states of 5% leading to a total amount of 40%) or leave the
money abroad. Choice is quickly made for him.
However, it doesn’t mean that Apple will never repatriate the cash to the US nor that he
estmates that the current situaton (i.e. “paying nearly nothing” – his words - on the
amounts earned abroad). He is waitng for the tax rates to be fairer. For him, the tax
amounts paid are not correlated to the level of patriotsm (the fact of paying a lot of tax
doesn’t increase people’s patriotsm, same reasoning for the contrary case).
He points out that Apple is the largest tax payer of the US as they pay 30% taxes on the
income earned in the US.
Regarding Apple’s tax advantages he points out that:
In the US, the sole tax advantage is the R&D tax credit 1 which is available to all US
companies.
They don’t shif their proft in tax heavens. They have internatonal (outside US)
money because they generate proft abroad (i.e. 2/3 of Apple’s business is located
abroad according to him). Then, they beneft from the local laws.
3. How long are you willing to keep un-repatriated income overseas?
Afer the tax reform.
4. With the EU ruling, do you feel picked on by the EU?
Nothing occurred yet but Cook will appeal in case of unfair hearing.
For him, Ireland didn’t gave them a special deal since those structuraton were available
to all enttes based on the Irish tax law, not only Apple.
For him, people concerns is not that Apple doesn’t pay taxes but WHERE it does.
1
Research and development (R&D) tax credits are a valuable government tax relief that
rewards companies for investng in innovaton.
Questions/affirmations
1. Cooks hopes that the US will proceed with a CIT reform regarding the fact that the US is the
sole state which opted for deferral taxation of income earned abroad.
For Cook, a reform is in the best interest of the US because the current system gives
incentve to keep the money earned abroad outside of the US
Moreover, for him, each dollar should be taxed directly. In order to do so, there should
be free foo of capital. Such changes of the system would favor investment in the US
2. About the allegation of Apple’s tax frauds
He recalls that the income earned abroad remain subject to US CIT.
He also recalls that companies have the choice to repatriate (and pay 35% of tax plus a
weighted average across the states of 5% leading to a total amount of 40%) or leave the
money abroad. Choice is quickly made for him.
However, it doesn’t mean that Apple will never repatriate the cash to the US nor that he
estmates that the current situaton (i.e. “paying nearly nothing” – his words - on the
amounts earned abroad). He is waitng for the tax rates to be fairer. For him, the tax
amounts paid are not correlated to the level of patriotsm (the fact of paying a lot of tax
doesn’t increase people’s patriotsm, same reasoning for the contrary case).
He points out that Apple is the largest tax payer of the US as they pay 30% taxes on the
income earned in the US.
Regarding Apple’s tax advantages he points out that:
In the US, the sole tax advantage is the R&D tax credit 1 which is available to all US
companies.
They don’t shif their proft in tax heavens. They have internatonal (outside US)
money because they generate proft abroad (i.e. 2/3 of Apple’s business is located
abroad according to him). Then, they beneft from the local laws.
3. How long are you willing to keep un-repatriated income overseas?
Afer the tax reform.
4. With the EU ruling, do you feel picked on by the EU?
Nothing occurred yet but Cook will appeal in case of unfair hearing.
For him, Ireland didn’t gave them a special deal since those structuraton were available
to all enttes based on the Irish tax law, not only Apple.
For him, people concerns is not that Apple doesn’t pay taxes but WHERE it does.
1
Research and development (R&D) tax credits are a valuable government tax relief that
rewards companies for investng in innovaton.
