Here’s What Tim Cook Will Tell Senators About Apple, Offshore Cash and Taxes
Asa Mathat / AllThingsD.com
Apple has been accused by the Subcommittee of creating the “Holy Grail of tax avoidance,” and Cook is travelling to D.C. well armed to defend the company from such accusations. He’ll present some 18 pages of prepared testimony touching on everything from the “extraordinary” sums Apple pays annually in corporate income tax to the rationale for its massive foreign cash holdings and a careful rebuttal to allegations that it uses its Irish subsidiary to avoid U.S. taxes. On that last issue, which has drawn a fair amount of scrutiny, the company’s argument is particularly pointed:
According to Cook’s prepared testimony, “Apple wants to make clear to the Subcommittee that the Company does not use its Irish subsidiaries or any other entities to engage in the following tax practices that were the focus of the Subcommittee’s September 20, 2012 hearing, entitled Offshore Profit Shifting and the U.S. Tax Code. Specifically, Apple does not move its intellectual property into offshore tax havens and use it to sell products back into the U.S. to avoid U.S. tax, nor does it use revolving loans from CFCs to fund its domestic operations.”
Also included in Cook’s testimony is a condemnation of the current U.S. tax system, which Apple argues “undermines U.S. competitiveness,” and a proposal for reforms that might encourage companies to repatriate their offshore cash.
Apple has always believed in the simple, not the complex. This is evident in the Company’s products and the way it conducts itself. In this spirit, Apple has recommended to the Obama Administration and several members of Congress – and suggests to the Subcommittee today – to pass legislation that dramatically simplifies the U.S. corporate tax system. This comprehensive reform should:
- Be revenue neutral;
- Eliminate all corporate tax expenditures;
- Lower corporate income tax rates; and
- Implement a reasonable tax on foreign earnings that allows free movement of capital back to the U.S.
Apple recognizes these and other improvements in the US corporate tax system may increase the Company’s taxes. Apple is not opposed to such a result if it occurs in the context of an overall improvement in efficiency, flexibility and competitiveness. Apple believes the changes it proposes will stimulate the creation of American jobs, increase domestic investment and promote economic growth.
Cook’s testimony comes amid increased government scrutiny of Apple and its overseas cash holdings. As of the end of the March quarter, the company was holding about $100 billion outside the United States, with no intent of repatriating it under current U.S. tax law.
Here’s Cook’s testimony in its entirety, and below it the Senate Subcommittee report accusing Apple of avoiding some $10 billion in taxes per year.
