Apple may repatriate at least $5 billion in 2017: Tim Cook

Business Friday 02/September/2016 13:43 PM
By: Times News Service
Apple may repatriate at least $5 billion in 2017: Tim Cook

San Francisco: Apple may bring at least $5 billion of its offshore cash back to the US next year, Chief Executive Officer Tim Cook suggested in an interview on Irish radio.
"We provisioned several billion dollars for the US for payment as soon as we repatriate it, and right now I would forecast that repatriation to occur next year,” Cook told RTE Radio 1.
Given the US’s 35 per cent top corporate tax rate, a US tax bill of at least $2 billion suggests that Apple plans to bring at least $5.7 billion back next year. The European Commission said on Tuesday that the Cupertino, California-based company owed as much as $14.5 billion in back taxes in Ireland, where it books most of its European revenue.
European Commissioner Margrethe Vestager said Apple paid 0.005 percent tax on its European sales in 2014 — a figure that Apple has disputed. The iPhone maker’s global effective tax rate was 26 per cent that year, according to its annual report.
Apple can credit any tax it pays abroad against the 35 per cent it must pay should it bring offshore profits home. This means any extra European tax the company pays would cut what it pays in the US This has sparked concern at the US Treasury Department about missing out on tax revenue and has raised expectations for US tax reform. Republican nominee Donald Trump has proposed taxing companies’ offshore profit at 10 per cent.
It’s unclear whether Cook’s forecast of a repatriation in 2017 depends on US tax reform, or would happen without that. Apple spokesman Josh Rosenstock declined to comment.
Apple investors in the US are watching this closely because right now most of the company’s profit is stashed overseas, making it harder for the company to pay dividends, buy back stock and acquire US companies. Apple has borrowed heavily to get around this, but there’s a limit to how much companies can borrow, even for a company as profitable as Apple.
The company had $232 billion in cash at the end of June. About $215 billion was kept outside of the US, Cook told investors July 26.