Dodging billions of taxes the Apple way

Rappler.com

Tax payments that reach US$3.3 billion maybe mind boggling for a company like Apple, which earned $34 billion in 2011. But that translates to only 9.8% tax rate, a far cry from the 24% paid by equally giant global companies like Walmart. Another red flag that triggered a New York Times weekend piece on Apple’s supposed tax avoidance tricks was the growing complaints among many in California, as well as in Cupertino where Apple is building its new spaceship headquarters. These “tricks” reportedly include Apple’s strategy to allocate 70% of profits “outside” the US or in states that impose lower taxes, such as in Nevada, which charge zero corporate tax on an Apple subsidiary that collects the company’s cash. The same is true for sales. Employees who are based in high-tax countries are, in accounting terms, selling Apple products on behalf of subsidiaries located in low-tax countries. And global iTunes are “sold” via Luxembourg, which offers tax incentives for companies that “do business” there, in the process allowing Apple to dodge taxes in US, Frace, Britance and other countries that would charge higher tax rates.

Read more on The New York Times and Rappler.