EDINBURGH — Global tech giant Apple is set to benefit from tax reforms in the US. Apple is in the BizNews global portfolio as are other beneficiaries of Donald Trump’s tax proposals. These include Google parent company Alphabet, Facebook and Microsoft. Until now, US companies have opted to leave foreign cash offshore rather than bringing it home. – Jackie Cameron
By Thulasizwe Sithole
President Donald Trump has delivered a gift to Apple shareholders in the form of income tax reforms that will allow the technology group to book extra profits.
The Financial Times estimates that Apple will see as much as $47bn slashed from its expected tax liability if the Republicans push through their tax plan. This means that Apple is the biggest beneficiary of the legislation now working its way through Congress.
A reduced tax rate would be applied to foreign earnings held outside the US, creating the windfall, said the London-based FT.
In addition to the one-off windfall, Republican tax bills would exclude future foreign profits from US taxes.
Apple and other tech giants have left overseas earnings abroad rather than paying 35% in corporate tax to bring the money back home, it notes.
The Republican proposal is for tax of no more than 14.5% – whether or not money is repatriated to the US, reports the FT.
The FT highlights that Apple’s overseas cash pile is significantly bigger than any of the other large US multinationals. It has an estimated $250bn in foreign cash. This is about the fifth of the total overseas holdings for all US companies, it reports.
Next on the list is Microsoft, with about $130bn in foreign cash, followed by Cisco and Google’s parent company Alphabet, which each have more than $50bn in foreign cash, according to Bloomberg.
Other companies with sizeable cash sums outside the US are: Oracle, Amgen, Gilead Sciences, Qualcomm, GE, Coca-Cola, PepsiCo, Procter & Gamble and Facebook.
Apple has already set aside more than $30bn for potential taxes. This figure is more than it is likely to face and it would therefore likely record the difference as a one-off profit, says the FT.
The FT notes, too, that Apple executives have made little secret of their hope of repatriating funds for probable use in stock buybacks.