Tech Big wig Apple Inc. (NASDAQ:AAPL) paid a mere 1.9 percent tax on the $36.8 billion in overseas profits it made in fiscal 2012. This information was detailed in the company’s latest 10-K filing with the SEC. Of the non-U.S profits of $36.8 billion, Apple Inc. (NASDAQ:AAPL) parted with only $713 million in tax. Apple adds to a bulging list of companies that have since resolved to tactful tax avoidance schemes.
There seemingly appears to be a loophole in accounting for taxes from overseas operations, as the 1.9 percent tax is a mere divide of what Apple Inc. (NASDAQ:AAPL) paid in its U.S. home market. In the U.S., the tax collector managed to scoop 35 percent tax. The U.K. rate, although smaller than the U.S.’s rate, was notably high, at 25 percent.
To notably reduce tax rate on overseas profits, Apple Inc. (NASDAQ:AAPL) does not bring back the profits that it makes to its home market. Interestingly, Apple has not broken any laws. Although the move is widely deemed to be morally bankrupt- considering the company makes a fortune at the expense of ordinary tax payers- it is not an isolated event. This fashion of tax avoidance has become common place in today’s tech space. Companies always want to put a smile on shareholder’s faces regardless of the methods. It is actually reported that many tech heavyweights, including Google Inc (NASDAQ:GOOG), Starbucks Corporation (NASDAQ:SBUX), and Amazon.com, Inc. (NASDAQ:AMZN), use tax havens to lower their aggregate tax bills. Tax havens like Luxembourg, Ireland, and Switzerland have notably lower corporation taxes when compared to other countries and as such, are very popular with big companies.
The issue of paying low corporation taxes has spiraled out of control in the U.K., prompting parliamentary committees to grill a string of tech companies that have capitalized on the loop holes in the country’s revenue collection system.
One U.K committee is not taking the matter lightly, and on Monday ( which is today), it intends to haul Amazon.com, Inc. (NASDAQ:AMZN), Starbucks Corporation (NASDAQ:SBUX), and Google Inc (NASDAQ:GOOG) before the commons public accounts where all three tech big wigs will explain why they pay little tax. Unfortunately, efforts by U.K. parliamentary committees are not being complemented by the U.K. government. The U.K. government has taken the back seat in the whole issue. It has not taken any notable actions to seal the gaping loop holes in the country’s revenue collection system.