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Apple Releases Statement Ahead of Tim Cook's Senate Appearance on Tax Policy

Apple today released a statement [PDF] ahead of Apple CEO Tim Cook, CFO Peter Oppenheimer, and head of tax operations Phillip A. Bullock's appearances in front of the U.S. Senate Permanent Subcommittee on Investigation tomorrow.

In the seventeen page statement, Apple notes that it has created hundreds of thousands of jobs in the United States -- both directly and through suppliers and contractors. It notes that the company paid nearly $6 billion in federal taxes in fiscal 2012 and the company expects to pay $7 billion in 2013.

The company also says Apple "does not use tax gimmicks", pushing back against reporting in The New York Times that examined Apple's international tax strategies.

Subcommittee
Apple, a California company, employs tens of thousands of Americans, creates revolutionary products that improve the lives of tens of millions of Americans, and pays billions of dollars annually to the US Treasury in corporate income and payroll taxes. Apple’s shareholders – from individuals and institutions to pension funds and public employee retirement systems – have benefitted from the Company’s success through the appreciation of its stock price and generous dividends. Apple safeguards the capital entrusted to it by its shareholders with prudent management that reflects the Company’s extensive international operations. Apple complies fully with both the laws and spirit of the laws. And Apple pays all its required taxes, both in this country and abroad.
Apple reiterates repeatedly that all of its financial activities are fully legal and in the best interests of its shareholders. The company says it supports comprehensive reform of the U.S. corporate tax system, instead proposing a new system that is "revenue neutral, eliminates all tax expenditures, lowers tax rates and implements a reasonable tax on foreign earnings that allows free movement of capital back to the US." Apple notes that this would likely result in the company paying even more in corporate tax, but supports it nonetheless.

The document includes an extensive history of the company, as well as fairly extensive details about Apple's corporate structure and tax practices, including details about Apple's sales and use tax payments ($1.3 billion in FY2012), state income tax payments ($830 million), and Apple's contributions to employer payroll taxes ($327 million).

It lays out Apple's network of foreign subsidiaries, including several located in Ireland which distribute 'active foreign, post-tax income as dividend payments within Apple's foreign corporate structure'.
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 US Tax Code. Specifically, Apple does not move its intellectual property into offshore tax havens and use it to sell products back into the US to avoid US tax, nor does it use revolving loans from CFCs to fund its domestic operations. Apple does not hold money on a Caribbean island, does not have a bank account in the Cayman Islands, and does not move any taxable revenue from sales to US customers to other jurisdictions in order to avoid US taxation.
The statement continues in some detail, examining Apple's various international holdings and how the company uses them to fund international expansion of retail stores and other investments.

It also notes that analysis of its decision to issue $17 billion in debt to fund share repurchases and dividends, rather than repatriating foreign earnings, "was in its shareholders' best interests".

Apple CEO Tim Cook and CFO Peter Oppenheimer will appear at 9:30AM Eastern time in front of the U.S. Senate Permanent Subcommittee on Investigation. The hearing, titled "Offshore Profit Shifting and the U.S. Tax Code - Part 2" will be in the Dirksen Senate Office Building. The subcommittee is attached to the U.S. Senate Committee on Homeland Security and Government Affairs.

Other witnesses at the hearing include tax policy experts from the IRS and the Department of the Treasury, as well as professors from Harvard and Villanova.

Note: Due to the political nature of the discussion regarding this topic, the comment thread is located in our Politics, Religion, Social Issues forum. All MacRumors forum members and site visitors are welcome to read and follow the thread, but posting is limited to forum members with at least 100 posts.

Top Rated Comments

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16 months ago

In the seventeen page statement, Apple notes that it has created hundreds of thousands of jobs in the United States -- both directly and through suppliers and contractors. It notes that the company paid nearly $6 billion in federal taxes in fiscal 2012 and the company expects to pay $7 billion in 2013.


Meanwhile, Google pumps billions into Korean corporate coffers with its "free" mobile OS development, turning Samsung into the singlemost dominant mobile electronics provider in the world.

Yet I'm supposed to cheer for Google and not Apple. Not happening.
Rating: 11 Votes
16 months ago

Apple needs to start caring about America and creating domestic jobs.


I thought they already have tens of thousands of jobs here? Are you saying they should stop operations overseas altogether?

Nothing is more American than a capitalist company, and Apple is a prime example of a capitalist company
Rating: 11 Votes
16 months ago

Meanwhile, Google pumps billions into Korean corporate coffers with its "free" mobile OS development, turning Samsung into the singlemost dominant mobile electronics provider in the world.

Yet I'm supposed to cheer for Google and not Apple. Not happening.


Yes, funny how all these "patriots" seem to constantly pick apart their American company while constantly bolstering a Korean conglomerate with questionable practices both in Korea and abroad. And Apples the "unpatriotic" one? Irony at its finest.
Rating: 10 Votes
16 months ago

Apple needs to start caring about America and creating domestic jobs.


All American tech companies need to do this.
Rating: 7 Votes
16 months ago
Bottom line: This is not Apple's problems. It is the governments' problems. Apple is doing what's right.
Rating: 6 Votes
16 months ago

Well, there you have it. Apple officially stated it doesn't not evade taxes using the "Double Irish Dutch Sandwich".

Do we believe them?


I think Apple is very aware that they are under an intense amount of scrutiny from almost every angle, so they're playing pretty much everything as straight as possible. I really doubt that Tim and Peter would go and lie in front of congress. Apple gets headlines for merely having magnets in their products; imagine what lying about their taxes would do.
Rating: 5 Votes
16 months ago

Note: Due to the political nature of the discussion regarding this topic, the comment thread is located in our Politics, Religion, Social Issues (http://forums.macrumors.com/forumdisplay.php?f=47) forum. All MacRumors forum members and site visitors are welcome to read and follow the thread, but posting is limited to forum members with at least 100 posts.


What is MR so scared of that they enforce this?
But I do see their point. Best to let the regulars post on it, rather then everyone post and then later on delete all those posts anyways. Knowing how things run here, this is the better action taken.

Back on topic . . . .

Apple earn money overseas.
Apple pay tax on these overseas earnings tot he overseas countries.
But the government in unhappy and want more of this done in the US or brought back to the US so it can be US taxed.

It's the US government's fault. No one wants to pay a high tax by the US on money they were already taxed on by foreign countries.
Rating: 4 Votes
16 months ago

Apple needs to start caring about America and creating domestic jobs.


Are you meaning to imply that America is only good for manufacturing, and all the other higher skill jobs here are not considered? America is much better than just an assembly country. We have an environment that suits creation and engineering, not just manufacturing. We have a treasure trove of intellectual property. To think Apple doesn't care about America simply because the majority of assembly work is done off shores, is insulting to American entrepreneurship. Apple is an example of American capitalism at its finest. Think about all the people employed directly by Apple, and indirectly (developers, component suppliers, etc). Apple created a $2 billion+ industry that didn't exist prior to 2008 (mobile apps). Apples done quite a bit for America and the world at large.
Rating: 4 Votes
16 months ago

Nice timing with those "made in the US" macs...


Tim Cook said Apple would build some PCs here months ago, long before these hearings were scheduled.
Rating: 3 Votes
16 months ago
Plus, Apple has a lot of expenses overseas. Why should they pay to repatriate money, some of which would have to turn right back around and fund foreign operations?

This has happened for decades in tech now, it's just that all of it is on one ledger instead of split up among licensee and parent company ledgers across territories.
Rating: 3 Votes

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