Tim Cook: Full Testimony Before Congress [VIDEO]

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the questions and lawmakers answering as to why our corporate tax rate is the rate that it is. this is old news but apple being the biggest company it’s an issue the tax code is at fault here. they have to redo it. apple making the point it is the largest corporate taxpayer in the united states, payed $6 billion in cash. we’re back on the other side of this break.

Sen. Levin: Where Is ASI ‘Functionally’ Managed & Controlled?

Sen. Carl Levin, (D-MI), questions Tim Cook, Apple CEO, and Phillip Bullock, Apple’s head of tax operations about whether income from Apple Sales International and AOI is paid in the United States or Ireland.

Transcript:

answer now with tim cook. here is carl levin. recently more and more enterprises argued abroad by american firms have arranged their corporate structures aided by artificial arrangements between parent and subsidiary regarding intercompany pricing, the transfer of patent licensing rights, managing fees and similar prctices which maximized the accumulation of profits and the tax haven. do you agree with that? the president and his brother had been long-term heroes of mine, so i’m sure if he said it at the time, it was true. today, from at least our point of view, i don’t consider deferral to be a sham or abuive in any kind of way. does apple own directly or indirectly aoi, aoe and asi? yes,pple incorporated owns directly or indirectly aoi, aoi and asi. all those companies in ireland are owned by apple effectively, is that correct? they are all legally owned by apple incorporated, yes. and where is aoi functionally managed and controlled? in our view it is functionally managed and controlled, which is an irish legal concept, in the united states. a february 11 letter to the subcommittee apple wrote, quote, has not made a determination regarding the location of aoi central manage lt control. why did you tell us that? mr. chairman, the reason we responded in that manner is that under irish law, the requirement for evaluating our concluding on the tax residency of ireland looks to whether or not central management and control takes place in ireland or not. it does not formally require that you make a determination that it takes place somewhere else. but you’ve told us here this morning that you believe that the location of aoi’s central management control is in the united states — or apple has concluded that, is that correct? yes. and i believe that? a previous meeting with your staff, they asked the same question and i believe i provided the same response. mr. cook, do you agree that the location of aoi’s central control is in the united states? sir, i don’t know what the legal definition of that is, but from a practical point of view, yes. now relative to asi, mr. bullock, is asi managed and controlled in the united states? as a practical matter, applying the irish legal standard of central management and control, i believe that it is centrally managed and controlled from the united states. and does apple agree that it is functionally managed and controlled in the united states? under irish law — no, under our law, do you believe that? i don’t believe that central management and control is a legal term under u.s. tax law. do you believe it is functionally manage the and controlled in the united states? yes. mr. cook, do you agree? there’s a significantmount of decisions and leadership and negotiations that go on in ireland. but some of the most strategic ones do take place in the united states. would you agree that on balance asi is functionally managed and controlled in the united states? from a practical matter. i don’t know the legal definition. practical matter you would agree that it is functionally managed and controlled in the united states? yes, senator. thank you. now, mr. bullock, aoi is incorporated in ireland, is that correct? yes, mr. chairman, it i incorporated in ireland. and where is aoi a tax resident? it does not have a tax residency. that does not mean that it does not pay taxes. the interest that it earns is paid — u.s. taxes are paid in full on its interest by apple, inc. and the interest you are talking about is on the tens of billions of dollars that it has in cash, is that correct? correct. the cash that was distributed from the operating subsidiaries underneath. of cash earn interest and that interest is paid by apple inc? is that correct? it pays a the statutory rate of 35%, yes. but there’s no income — there’s no tax paid on the money itself that has been sent to apple — excuse me, to aoi by the distributors, is that correct? there’s been no tax paid on that either in ireland or the united states on those tens of billions of dollars which has been sent to aoi from the subsidiaries below that? the income of the subsidiaries have been subject to tax in the countries in which they operate. right. but there’s been no tax paid in ireland on those distributions nor in the united states or those profits, is that correct? there’s been — there is no u.s. tax on the transfer of those balances to aoi. the income earned by asi and aoe has been subject to irish tax in full and in accordance with the agreement that we have with ireland. and is that a maximum of 2%? mr. chairman, i’m not precisely sure of the me be cannics of the computation. not the mechanics but is that a maximum of 2%? approximately, yes. thank you. has aoi filed a corporate income tax? that is senator carl levin questioning the apple executives.

Apple CEO Cook: We Don’t Use ‘Tax Gimmicks!’

In testimony to a Congressional panel, Apple CEO Tim Cook rejects accusations that Apple uses overseas entities to avoid billions in U.S. taxes and calls for a drastic simplification of the country’s tax code.

Transcript:

we don’t move our money from foreign subsidiaries in order to reskirt the tax. our foreign subsidiaries hold 70% of the cash because of the very rapid growth of our international business. we use the earnings to fund our foreign operations, such as spending billions to acquire commitments for apple products and apple retail products around the world. under the current u.s. corporate tax system, it would be very expensive to bring that cash back to the united states. umpl the tax code has not kept up with the digital age. it handicaps american corporations in relationship to the foreign competitors who don’t have constraints on the free movement of apple. we believe it brings increased responsibilities to the communities where we live, work and sell our products. we enthusiastically embrace the belief to whom much is given, much issing quired. in addition to creating hundreds of thousands of american jobs and developing products that deeply enrich the lives of millions apple is a champion of human rights, education and the environment, our belief that innovation should serve the deepest values and highests a places is not going to kpang. we are deeply committed to our country’s welfare. we believe great public policy can be a catalyst for a better society d a stronger america. apple has always believed in the simple. not the complex. you can see this in the products and in the way we conduct ourselves. in the spirit that we recommend a dramatic simplification of the tax code. it should eliminate all corporate tax

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