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Apple pays taxes in every country it does business in. The remaining profits it keeps in Ireland because of the low tax rate, otherwise if returned to the US it

Apple pays taxes in every country it does business in. The remaining profits it keeps in Ireland because of the low tax rate, otherwise if returned to the US it would be taxed again. US international corporate taxation works like this if you repatriate profits to dividend to shareholders: 1) First pay taxes on profits in each country the profits were made. 2) Out of the remainder pay state corporate income tax in the US state you are headquartered in. 3) out of remainder pay federal corporate income tax. 4) out of remainder shareholder pays state income tax. 5) out of remainder shareholder pays federal dividend tax. Typically the shareholder is able to keep about 30-40% of their share of the original profits after they go through the five layers of taxation.

DSingularity 6y ago
Seriously? 30-40? Is that accurate!?
- Terretta 6y ago
  Less if you include sticker price then deduct VAT.
- valuearb 6y ago
  Following is roughly accurate from memory. Worldwide, Corporate tax rates by country range between 5-55%, but typically are between 20-30%. US Corporate tax rate is now 20%. State corporate tax rates range from zero (NV) to 10%. State income tax rates range from zero to 11%. Federal dividend rates range from 15-20%. Using the the best case scenario (no state income or corporate tax, foreign corporate tax of 5%) gives a total effective tax rate of 35%. Using more typical rates (8% state income/corporate, 25% foreign) produces a total tax rate of 58%. So looks like I was pessimistic, probably because my from memory numbers didn’t include Trump tax cut. But a worst case scenario (France 35%, CA 9%, Dividend 20%) still produces a 65% total effective tax rate.
  - AnthonyMouse 6y ago
    And it's a bit worse than that even because of inflation. You buy some shares of Verizon for $21.11 in 1990, you sell them for $56.85 today, they claim you have a taxable gain of $35.74. But 20.62 of that was just inflation, so the rate you're paying on the last bit is really ~47% rather than 20%.
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ksec 6y ago
Well yes, the problem is people seems to think it should be "revenue" taxed and not profits "taxed". ( Dont ask why, but that is the general sentiment ) And you can see they are very vocal about it, If they are sold in X, they should be taxed in X. The problem with current Profits based system is that it allows Apple X to paid Apple Ireland 99% of your profits as IPR, Brand / Logo usage ( Apple France paying to Apple Ireland ). Effectively leaving only 1% of the profits being taxed in X. And there is no way to determine the proper value of those IPR. Apple spends tens of billions every year on R&D and Marketing. So not paying for those IPR would be wrong, but also paying no tax in countries is also wrong. And no one so far has a reasonable solution to fix the current profit transfer problem. And it is a much harder problem with Globalisation.
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- sharpneli 6y ago
  VAT is basically a revenue tax. For each iPhone sold in Finland the government gets ~20%. Plenty of countries have a similar system.
  - bald 6y ago
    VAT is taxing the difference between the procurement price and the sales price (thus its name Value-Added Tax), not the revenue. E.g., if Apple Finland procures the phone from Apple Inter Co., two separate entities, for USD 499 and sells it for USD 500, the tax would be on the USD 1, i.e., 20 cents, since Apple Finland would get the VAT paid to Apple Inter Co offset by the Finnish tax authorities.
    - joefourier 6y ago
      While true in a sense, that's not the best way of looking at it. VAT is charged on the sale price of every intermediary, however businesses can claim back VAT on their purchases. In your example, Apple Inter Co. would sell the iPhone to Apple Finland for $499 + $119.76 (VAT in Finland is 24%). Apple Finland would pay $618.76, claim back $119.76, and sell the phone for $500 + $120 to the consumer, charging the consumer $620 and giving $120 to the government. So yes, Apple Finland will have given effectively about 20 cents to the government, but the total $120 of VAT will still be paid and calculated on the end sale price, not the profit margin.
lostlogin 6y ago
> Apple pays taxes in every country it does business in. It doesn’t in New Zealand - or at least it didn’t up until 2019. https://www.theguardian.com/world/2017/mar/23/apple-paid-no-tax-in-new-zealand-for-at-least-a-decade-reports-say https://www.theguardian.com/world/2017/mar/23/apple-paid-no-...
- donarb 6y ago
  According to the article, Apple is following the law, that is, Apple pays taxes where it is legally required to do so. "A tax agreement between New Zealand and Australia sees dual claims on income tax default to where the company is controlled."
  - lostlogin 6y ago
    Perhaps, but it paid no tax in NZ, and the OP stated Apple pays tax in every country in which it does business.
naveen99 6y ago
After all the money collected by the government is spent back to not government. It all gets melted into the interest rates.

DSingularity 6y ago

Seriously? 30-40? Is that accurate!?

Terretta 6y ago
Less if you include sticker price then deduct VAT.
valuearb 6y ago
Following is roughly accurate from memory. Worldwide, Corporate tax rates by country range between 5-55%, but typically are between 20-30%. US Corporate tax rate is now 20%. State corporate tax rates range from zero (NV) to 10%. State income tax rates range from zero to 11%. Federal dividend rates range from 15-20%. Using the the best case scenario (no state income or corporate tax, foreign corporate tax of 5%) gives a total effective tax rate of 35%. Using more typical rates (8% state income/corporate, 25% foreign) produces a total tax rate of 58%. So looks like I was pessimistic, probably because my from memory numbers didn’t include Trump tax cut. But a worst case scenario (France 35%, CA 9%, Dividend 20%) still produces a 65% total effective tax rate.
- AnthonyMouse 6y ago
  And it's a bit worse than that even because of inflation. You buy some shares of Verizon for $21.11 in 1990, you sell them for $56.85 today, they claim you have a taxable gain of $35.74. But 20.62 of that was just inflation, so the rate you're paying on the last bit is really ~47% rather than 20%.

deleted 6y ago

[deleted]

ksec 6y ago

Well yes, the problem is people seems to think it should be "revenue" taxed and not profits "taxed". ( Dont ask why, but that is the general sentiment ) And you can see they are very vocal about it, If they are sold in X, they should be taxed in X. The problem with current Profits based system is that it allows Apple X to paid Apple Ireland 99% of your profits as IPR, Brand / Logo usage ( Apple France paying to Apple Ireland ). Effectively leaving only 1% of the profits being taxed in X. And there is no way to determine the proper value of those IPR. Apple spends tens of billions every year on R&D and Marketing. So not paying for those IPR would be wrong, but also paying no tax in countries is also wrong. And no one so far has a reasonable solution to fix the current profit transfer problem. And it is a much harder problem with Globalisation.

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deleted 6y ago
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sharpneli 6y ago
VAT is basically a revenue tax. For each iPhone sold in Finland the government gets ~20%. Plenty of countries have a similar system.
- bald 6y ago
  VAT is taxing the difference between the procurement price and the sales price (thus its name Value-Added Tax), not the revenue. E.g., if Apple Finland procures the phone from Apple Inter Co., two separate entities, for USD 499 and sells it for USD 500, the tax would be on the USD 1, i.e., 20 cents, since Apple Finland would get the VAT paid to Apple Inter Co offset by the Finnish tax authorities.
  - joefourier 6y ago
    While true in a sense, that's not the best way of looking at it. VAT is charged on the sale price of every intermediary, however businesses can claim back VAT on their purchases. In your example, Apple Inter Co. would sell the iPhone to Apple Finland for $499 + $119.76 (VAT in Finland is 24%). Apple Finland would pay $618.76, claim back $119.76, and sell the phone for $500 + $120 to the consumer, charging the consumer $620 and giving $120 to the government. So yes, Apple Finland will have given effectively about 20 cents to the government, but the total $120 of VAT will still be paid and calculated on the end sale price, not the profit margin.

lostlogin 6y ago

> Apple pays taxes in every country it does business in. It doesn’t in New Zealand - or at least it didn’t up until 2019. https://www.theguardian.com/world/2017/mar/23/apple-paid-no-tax-in-new-zealand-for-at-least-a-decade-reports-say https://www.theguardian.com/world/2017/mar/23/apple-paid-no-...

donarb 6y ago
According to the article, Apple is following the law, that is, Apple pays taxes where it is legally required to do so. "A tax agreement between New Zealand and Australia sees dual claims on income tax default to where the company is controlled."
- lostlogin 6y ago
  Perhaps, but it paid no tax in NZ, and the OP stated Apple pays tax in every country in which it does business.

naveen99 6y ago

After all the money collected by the government is spent back to not government. It all gets melted into the interest rates.