Senate probe: Apple avoids taxes with overseas accounts
Apple Inc. employs a group of affiliate companies located outside the United States to avoid paying billions of dollars in U.S. income taxes, a Senate investigation has found.
The world's most valuable company is holding overseas some $102 billion of its $145 billion in cash, and an Irish subsidiary that earned $22 billion in 2011 paid only $10 million in taxes, according to the report issued Monday by the Senate Permanent Subcommittee on Investigations.
The strategies Apple uses are legal, and many other multinational corporations use similar techniques to avoid paying U.S. income taxes on profits they reap overseas. But Apple uses a unique twist, the report found. Its tactics raise questions about loopholes in the U.S. tax code, lawmakers say.
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The spotlight on Apple's tax strategy comes at a time of fevered debate in Washington over whether and how to raise revenues to help reduce the federal deficit. Many Democrats complain that the government is missing out on collecting billions because companies are stashing profits abroad and avoiding taxes.
Apple CEO Tim Cook is scheduled to testify at a hearing by the subcommittee Tuesday.
Apple spokesmen didn't immediately respond to a request for comment Monday.
The company has made clear that given current U.S. tax rates, it has no intention of repatriating its overseas profits to the United States.
The subcommittee also has examined the tax strategies of Microsoft Corp., Hewlett-Packard Co. and other multinational companies, finding that they too have avoided billions in U.S. taxes by shifting profits offshore.
The subcommittee's report estimates that Apple avoided at least $3.5 billion in U.S. federal taxes in 2011 and $9 billion in 2012. The company, based in Cupertino, Calif., paid $2.5 billion in federal taxes in 2011 and $6 billion in 2012.