Apple CEO makes no apology for company's tax strategy

Tue May 21, 2013 5:37pm EDT
 
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

By Patrick Temple-West and Kevin Drawbaugh

WASHINGTON (Reuters) - Apple Inc Chief Executive Tim Cook made no apology on Tuesday for the iPad maker saving billions of dollars in U.S. taxes through Irish subsidiaries and told lawmakers that his company backs corporate tax reform, even though it may end up paying more.

The Senate Permanent Subcommittee on Investigations has found that Apple in 2012 alone avoided paying $9 billion in U.S. taxes, using a strategy involving three offshore units with no discernible tax home, or "residence."

Cook, in his first congressional testimony since becoming Apple CEO in 2011, said his company is a major taxpayer, handing over nearly $6 billion in cash to the U.S. government in 2012.

"We expect to pay even more this year," Cook said. "We pay all the taxes we owe."

But Senator Carl Levin, chairman of the subcommittee and a veteran tax sleuth, said Apple had sought "the Holy Grail of tax avoidance," creating one Irish unit that paid no income taxes to any national tax authority for the past five years.

Levin said Apple used Ireland as a base for a web of offshore holding companies and negotiated a deal with the Irish government for a tax rate of less than 2 percent. The top U.S. corporate tax rate is 35 percent, one of the world's highest.

Cook said Apple did not depend on tax gimmicks. "We don't move intellectual property offshore and use it to sell our products back to the United States to avoid taxes. We don't stash money on some Caribbean island," he said.

In Ireland, where low corporate taxes have been an economic development tool for many years, the government said it had not made a special tax deal with Apple. If Apple's tax rate was too low, it was the fault of other countries, deputy prime minister Eamon Gilmore told national broadcaster RTE on Tuesday.   Continued...

 
Apple CEO Tim Cook (C), CFO Peter Oppenheimer (L) and Apple Head of tax operations Philip Bullock appear before a Senate homeland security and governmental affairs investigations subcommittee hearing on offshore profit shifting and the U.S. tax code, on Capitol Hill in Washington, May 21, 2013. REUTERS/Jason Reed