Yesterday, the world’s most valuable company, Apple Inc. (NASDAQ:AAPL) reported its third quarter earnings which clearly missed the Wall Street expectations. It reported $35 billion in sales with $9.32 earning per share, analysts were expecting a revenue of $37.2-billion and earnings of $10.37 per share.
According to Business Insider, the tech giant never reports its real profits. In the last three years, the company has tucked away $10.5 billion of overlooked assets in countries with low tax rates. Though investors will be glad if the company adds $10.5 billion to its profits officially, its reputation as a responsible tax payer in America will be ruined. It is now lobbying to change the U.S. Law, so that it can erase the money inconspicuously from the record. It is one of the key issues in the presidential campaign.
The company keeps money generated from overseas sales in overseas accounts only. Apple Inc. (NASDAQ:AAPL) pays taxes only in the country where the devices are sold, and then transfers money through its various subsidiaries to the nations with low interest rates.
There is no difference between Apple and other American multinational corporations when it comes to manipulating financial data to save taxes, says accounting expert Robert Willens. Now, the cash in its overseas accounts has grown to a whopping $74 billion. The iPhone maker declined to comment on its tax strategies.
US multinationals are piling up cash in overseas accounts because they expect tax rate in America to reduce significantly. The current corporate tax rate of 35 percent is one of the highest in developed nations. During a presidential campaign, Mitt Romney said that he would completely remove the taxes on overseas profits. Obama attacked the idea by saying it would send more US jobs into emerging markets.
Apple Inc. (NASDAQ:AAPL) has no plans to repatriate the cash from overseas accounts at current corporate tax rates. Even when Tim Cook said Apple will pay dividends to its shareholders, he made it clear that the size of dividend will be determined solely on the basis of cash available in US accounts of the company.