Business

Policy

Make Apple, er, America Great Again: iGiant to bring home profits, pay $38bn in repatriation tax

Triumphant Trump touts terrific tax tactic

By Simon Sharwood

84 SHARE

Apple announced today it will start to repatriate back to America some of the massive profits it accumulated outside the USA – and will use the cash to Make America Great Again.

We’re using the Trump catchphrase because Apple’s action is only possible thanks to the new tax arrangements that the US president campaigned on, namely a one-off discount on repatriating foreign profits.

American companies with offshore operations previously faced the odd situation of having to pay tax in jurisdictions they make their money, then pay US taxes at 35 per cent on those profits too. Rather than pay twice, plenty left their cash offshore.

Uncle Sam's beancounters simply labeled those piles of dosh as “deferred” taxes, however, corporations were happy to defer for ages: Apple accumulated over US$250bn offshore, and showed little interest in bringing it home. Then, the Trump-friendly tax reform bill passed late last year offering a one-off discount rate of 15.5 per cent for repatriated profits.

And so, Apple has bitten on that offer because it’s announced it is bringing lots of money home.

The iPhone giant said it “anticipates repatriation tax payments of approximately $38 billion as required by recent changes to the tax law,” and claims that is the largest such payment ever.

Apple’s announcement also explained it will use lots of the cash in the USA on things like a new tech support center that will contribute to 20,000 new hires it plans to make in the Land of the Free. It’s also promised to build another campus somewhere in America, given its staff a $2,500 bous and tossed another $4bn into the fund it’s using to help US manufacturers innovate.

Manufacturing jobs are a Trump fetish, and the repatriation discount a pet policy, so it’s no surprise the tweeter-in-chief emitted the following today:

Bringing the cash home may also help Apple to address its reputation as a corporate scoundrel and perhaps avoid future Trump criticism. Before 2016's election, Trump criticized the California giant's practices. The biz will probably also find it easier to share some of the cash with its shareholders, and seeing as that’s the ultimate purpose of a public company any new disbursements will be welcomed.

Nations where Apple has used legal-but-cynical tax minimization tactics will be less pleased, as once the tech goliath's cash is gone, it’ll be harder to recover. ®

Sign up to our NewsletterGet IT in your inbox daily

84 Comments

More from The Register

Europe plans special tax for Google, Apple, Facebook, Amazon

French minister says around two per cent of turnover sounds about right

Amazon tried to entice Latin American officials with $5m in Kindles, AWS credits for .amazon

Brazil, Peru snub cheap gifts, refuse to unblock dot-word

Automated Weather Source didn't see this cloud coming: Amazon snatches up AWS.com

Uh, we'll be having that domain

Super Micro China super spy chip super scandal: US Homeland Security, UK spies back Amazon, Apple denials

UPDATED Officials: Not saying Bloomberg was wrong, we just believe biz saying Bloomberg was wrong

'Massage parlour' location looks like Amazon stealth-testing secret new wireless network

Happy ending? Nope. Big seller, small cells – report

Have a gander at this: Amazon agrees not to act as Silicon Valley's foie gras dealer

Online marketplace coughs up $100k for selling force-fed birds' livers despite ban

Amazon Alexa outage: Voice-activated devices are down in UK and beyond

That sound ... yes, that lack of sound ... it's here

EU watchdog sniffing around Amazon's merchant data collection

Not yet an investigation, Margrethe Vestager says

The march of Amazon Business has resellers quaking in their booties

Canalys Channels Forum 2018 'To team up with Amazon is like to team up with the devil'

Well that's just spliffing: UK Amazon merchants peddling Mary Jane

Hey, Bezos wanted to create the everything store...