The top executives at Apple has once again showcased their knack at avoiding the punitive hands of the tax collector after the Silicon Valley-based tech company reported a 2 percent tax spending for the chunk of money generated by the sales of their products overseas in the last fiscal year.
According to its annual report filed with the U.S Securities and Exchange Commission, Apple only shelled out $713 million in taxes on $26.87 billion in foreign profits.
On the other hand, the iPhone maker spent a whopping $12.26 billion in federal taxes and $1.06 billion in state taxes for the profits they earned in the United States.
Apple’s growing business empire was attributed to its engaging line of innovative products and tax strategies overseas.
Like many multi-national conglomerates, Apple is racking up the large portion of their profit money from the sales of their products abroad, where tax policies are lax and favorable for their business.
However, these profits tend to stay overseas as companies tried to avoid an onerous 35 percent tax rate if they decided to ‘repatriate’ their money obtained in foreign lands back to the United States. Several companies such as Cisco Systems have previously asked for tax relief for the repatriation of their overseas profits.
Despite spending an incredibly cheap amount of money for their overseas taxes, Apple has not utilized any loopholes just to prevent paying lucrative taxes.
Instead, the company’s top executives used their smarts to capitalize on the slack tax regulations abroad, giving them the leverage to spend less out of their enormous profits.
“These technology giants are playing by the rules, but the problem is the rules are broken. Who sets the rules? The government. And yet the government all but takes it out on the individual taxpayer by making them drag the country out of economic downturn kicking and screaming,” said ZDNet’s Zack Whittaker.
With the competition in the U.S tech market increasingly becomes tighter than ever, Apple will not stop at tapping all possible options to capitalize on the profit opportunities at tax-friendly countries such as China and India.