The Trump tax plan has the economy booming. Now Apple joins the party. Apple is hoping to bring $252 billion in foreign cash back to the United States.
AT&T, Boeing, Fifth Third Bank and Comcast ave all pledged massive investments into the United States economy.
Well, another one is coming.
Apple’s Tim Cook is super liberal and acts very angry at the tech council meetings. At this point he can’t even pretend that he’s not happy with the Republicans. Apple is seizing the moment make a longtime goal happen when they bring $252 billion that is overseas back to the United States.
Per 9to5 Mac:
Apple would be able to take advantage of a one-time tax break, paying just 15.5% tax on the cash, rather than the 35% it would have had to pay previously.
If Apple chose to bring all of the cash back to the US, it would pay $39.1B in tax. And this would be practical because the company has already set aside $36.3B – almost the entire amount – for exactly that eventuality. But there’s one catch …
Reuters notes that Apple could be caught out by one provision in the bill. The bill introduces a minimum tax of around 13% on income from patents held overseas, and this could put an end to one method Apple has used to reduce its tax bill.
The treatment of foreign patent profits is important to Apple because shifting those profits overseas was a cornerstone of its tax practices for decades.
In effect, the company attributes a large portion of the value of its products to patents and other intellectual property such as trademarks. Apple then assigns some of that IP, proportional to overseas sales, to subsidiaries in countries with low tax rates and assesses substantial patent royalties on sales. Those royalties then flow back to those low-tax locations, like Ireland.
This means that it no longer matters where the patents are held – Apple still has to pay US tax on the revenue assigned to them.
To further discourage companies from assigning patents to overseas subsidiaries, the tax bill also reduces the tax on patent income within the USA. This falls to 13.1%, meaning that Apple Inc might as well hold onto ownership of future patents, as there’s little to no benefit in shipping them off to tax havens.
This tax reform has supercharged the economy. Companies are investing billions of dollars in the United States. The investments are coming fast and furious.