Monday, May 20, 2013, 12:04 pm PT (03:04 pm ET)
Apple details 'extraordinary amount' of taxes it pays in testimony to US SenateApple on Monday published in full the formal testimony that Chief Executive Tim Cook plans to give before the Permanent Subcommittee on Investigations in the U.S. Senate.
The full document is available at Apple's website in PDF form, and is dated May 21, 2013, for when Cook is scheduled to appear before the subcommittee. Apple's CEO has been called before the U.S. Senate to testify on his company's offshore tax practices.
The Senate hearing is a continuation of the panel's investigation into how the practice of keeping profits offshore affects U.S. taxes. Apple currently has more than $100 billion in cash stored overseas, and the company has made it clear it has no plans to repatriate those funds at current tax rates.
In the testimony published on Monday, Apple argued that the company already "pays an extraordinary amount in U.S. taxes." The company asserts that it is likely the largest corporate income tax payer in the U.S., having paid nearly $6 billion to the U.S. Treasury in fiscal 2012.
"These payments account for $1 in every $40 in corporate income tax the U.S. Treasury collected last year," the testimony reads.
For Apple's current fiscal year, the company plans to pay more than $7 billion in taxes to the U.S. Treasury.
The testimony also argues that Apple does not use so-called "tax gimmicks." Specifically, Apple has said it does not:
- Move its intellectual property into offshore tax havens and use it to sell products back into the U.S. in order to avoid U.S. tax.
- Use revolving loans from foreign subsidiaries to fund its domestic operations.
- Hold money on a Caribbean island
- Have a bank account in the Cayman Islands.
The justification for Apple's "substantial foreign cash," as the company put it, is because the majority of its products are sold outside of the U.S. The iPhone maker's international operations accounted for 61 percent of its revenue last year, and increased to two-thirds of its revenue last quarter.
The company has also suggested that legislators enact an "objective examination of the U.S. corporate tax system, which has not kept pace with the advent of the digital age and the rapidly changing global economy." In the eyes of Apple executives, the U.S. tax code is in need of "comprehensive" reform in order to promote growth and enable American corporations to remain competitive on the global landscape.
Apple also took the opportunity to highlight its job creation, noting tat the company estimates it has created or supported about 600,000 U.S. jobs, including 50,000 who are directly employed by Apple.
Since word got out that Cook has been called to Washington to testify, Apple has gone on the offensive to justify the amount of taxes that it pays. Cook himself did a series of interviews last week to argue that his company pays the U.S. government every dollar that it is owed. Many of the talking points used by Cook last week are covered in greater detail in the testimony published on Monday.
"I can tell you unequivocally, Apple does not funnel its domestic profits overseas," Cook said last week in an interview with Politico. "We don't do that. We pay taxes on all the products we sell in the U.S., and we pay every dollar that we owe. And so I'd like to be really clear on that."
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