Cooky crumbles: Apple mulls yanking profits out of Europe and into US
Wonder if it has anything to do with that $14.5bn tax bill
Apple CEO Tim Cook may pull billions of dollars in profit out of Europe and bring them home to the US, less than a month after he vowed he wouldn't.
In the aftermath of the massive €13 billion ($14.5 billion) back tax claim that the European Commission landed on the electronics giant and the Irish tax authorities, Cook has done a number of interviews with the Irish press arguing his case.
In one, with state broadcaster RTE, he said the company had "provisioned several billion dollars for the US for payment as soon as we repatriate it, and right now I would forecast that repatriation to occur next year."
That is a significant shift from just two weeks ago, when Cook was pressed on the money that the company stashes in Ireland and told the Washington Post: "The tax law right now says we can keep that in Ireland or we can bring it back. And when we bring it back, we will pay 35 percent federal tax and then a weighted average across the states that we're in, which is about 5 percent, so think of it as 40 percent. We've said at 40 percent, we're not going to bring it back until there's a fair rate."
He went on: "Right now we're paying nothing on that and we leave it over there. But we – like many, many other companies do – wait for the money to come back."
The tax rate in Ireland wasn't exactly nothing: according to the EC, Apple was paying a 0.005 per cent tax rate on its earnings thanks to the arrangement it had reached with the Irish tax authorities. But with the Commission calling that approach "illegal state aid," it seems that the wait for the money to come back home is going to become significantly shorter.
Unsurprisingly, Cook took exception to that 0.005 per cent figure. "They just picked a number from I don't know where," he said in a different interview with the Independent. The EC decision was "maddening," he told RTE and he was "very confident" that it would be overturned on appeal.
Cook has been striking a careful balance this week between defending his company's tax approach and threatening repercussions if the authorities do decide that the company owes nearly $15bn in back taxes.
If the EC decision stands, Apple will also have to pay a far higher tax rate in future, requiring a massive rethink over how the company handles its enormous profits.
It seems that Cook's threat to repatriate funds back to the US may have strayed a little off that tightrope, however. In response to queries from the Wall Street Journal about the RTE interview, an Apple spokesman "clarified" what Cook meant.
"Mr Cook was referring to his optimism that the US will change its tax code next year, and that his comments didn't represent any change to Apple's position on the question," the newspaper was told.
Of course if the United States' tax authorities thought Apple was rethinking its approach due to the EC's decision and a higher Irish tax rate, it would have far less incentive to drop the tax rate on repatriated funds.
Poor old Apple, no what which way it turns, some government is starting to take away its hard-earned cash. ®