The U.S. Senate has called on Apple’s CEO Tim Cook to give an explanation of his company’s offshore tax practices on Tuesday, May 21st. The technology giant seems to be quite confident about the Senate hearing, as just a day before Cook has to appear in front of senators, Apple has released its testimony in which the California-based company has not only mentioned all the details regarding its tax practices but also suggest corporate tax reform. Apple’s testimony basically proposes comprehensive reform in corporate tax that according to the Cupertino-based company should eliminate all corporate tax expenses, impose reasonable tax on offshore earnings so capital can be moved to the US freely, bring down the rates of corporate income tax and be revenue neutral.
“While some Subcommittee members may have differing views on these tax policy matters, Apple hopes the Subcommittee will see that these recommendations aim to create meaningful change and go well beyond what most US companies propose. As both a pioneer and participant in the American innovation economy, Apple looks forward to working with the Subcommittee on its efforts to encourage comprehensive reform of the US corporate tax system. Apple appreciates the opportunity to appear before the Subcommittee to contribute constructively to this important debate.”
The testimony also features the current tax practices that Apple follows and also states that the company “made income tax payments to the US Treasury totalling nearly $6 billion – or $16 million per day.” Apple has also indicated that during the last year, US Treasury has collected taxes at a rate of 30.5 percent which is close to “$1 out of every $40 of corporate income taxes.”
Shedding light on the $17 billion debt that Apple has borrowed to buy back stock rather than using cash from its offshore accounts the company said that:
“If Apple had used its overseas cash to fund this return of capital, the funds would have been diminished by the very high corporate US tax rate of 35% (less applicable foreign credits). By contrast, given today’s historically low interest rates, issuing debt at a cost of less than 2% is much more advantageous for the Company’s shareholders. Because Apple was able to borrow at a cost lower than the cost of its equity, issuing debt lowered Apple’s overall cost of capital. Additionally, issuing debt served the interests of Apple’s shareholders because the debt’s interest.”
Let’s see whether Cook and other executives of Apple will be able to convince senators in Tuesday’s hearing with their testimony.
Source: 9to5Mac
Photo: Apple
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