Apple Only Had To Pay 1.9% Tax On All Overseas Earnings In 2012

Apple Only Had To Pay 1.9% Tax On All Overseas Earnings In 2012

During the fiscal year of 2012, Apple made more money than ever before and became the world’s most valuable company. But they also managed to pay only 1.9% of income tax on earnings outside of the U.S.  Of the $36.8 billion Apple earned outside the U.S. Apple only paid $713 million in taxes.

Some may see those numbers and cry foul, but Apple hasn’t done anything illegal. Like a lot of other Fortune 500 companies, Apple keeps their international profits stashed somewhere outside the U.S. rather than having to pay a heavy tax rate for bring that cash back to America. The strategy saves Apple billions on their tax bill, but it also limits what they can do with those profits.

Apple’s foreign tax rate is much lower than the general U.S. corporate tax rate which stands at 35%. If Apple brought their international profits back into the U.S., they would have a much higher tax rate that would be comparable to the 35% most companies pay. As a result, Apple has left about $82.6 billion overseas.

Apple uses a number of accounting moves to lower their tax bill by shifting profits to countries with lower tax rates. The associated Press calls the move the “Double Irish With a Dutch Sandwich,” where companies route profits through Irish and Dutch subsidiaries and then to the Caribbean.

As CEO of Apple, Tim Cook has told politicians in Washington that they should consider a “Tax Holiday” wherein U.S. companies like Apple and Google who have large amounts of cash stashed overseas, could bring that cash back into the U.S. tax-free and then invest in American companies.

  • MarcyBoy

    1.9% tax only….. unbelievable!

  • Shaun Green

    It’s about time governments around the world starting taxing multi-national corporations like Apple and Starbucks based on the revenue they generate in that country rather than their profits. Clever accountants can always hide profits but they can’t hide revenue. These greedy bastards need to be taught a lesson and cough up the taxes that hard pressed governments around the world so badly need right now.

  • Forsberg

    It’s about time governments around the world starting taxing multi-national corporations like Apple and Starbucks based on the revenue they generate in that country rather than their profits. Clever accountants can always hide profits but they can’t hide revenue. These greedy bastards need to be taught a lesson and cough up the taxes that hard pressed governments around the world so badly need right now.

    How do you suppose the tax on revenue should be? 20% ? A company with 30-40% margin maybe can pay the tax but then there are companies that have a 10-20% margin, then they would have to pay their entire margin in taxes, good luck trying to make a profit with that.

  • bri_maher

    It’s a very sensationalist headline. Apple paid all taxes on their US operations in the US, and they paid tax on profit in other countries in those respective countries. What they haven’t done is bring the money from other countries back into the US – which I don’t blame them for. Why bring it back in the country and be taxed on it, when you can use it for regional costs, and not have to pay tax on something you’ve already paid tax on.

    This is completely unlike starbucks, who didn’t pay tax like they should have in the country in which it was earned.

  • mjparme

    Who cares that they didn’t give their money to the government? You know what they can do now? Now they can use that money to develop new products which will create jobs. The idea that corporations should give their profits to government is ridiculous. Businesses and corporations create jobs, not government.

About the author

Buster HeinBuster Hein is Cult of Mac's Senior News Editor and lives in Phoenix, Arizona. Twitter: @bst3r.

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