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Does anyone know at what point the tax is paid? I ask because publicly traded companies avoid it by doing share buy backs. So Apple technically makes no profit.

Does anyone know at what point the tax is paid? I ask because publicly traded companies avoid it by doing share buy backs. So Apple technically makes no profit. 1% or 15% or 100% of technically nothing is nothing... >The deal also reportedly includes a framework to eliminate digital services taxes, which targeted the biggest American tech companies. Quid Pro quo Clarice!

mwint 5y ago
Apple might make no profit, but wouldn't the shareholders selling their stock back to Apple have to report the sale as capital gains? So (at least some) taxes would be paid on that money, just not by Apple directly.
- LatteLazy 5y ago
  So, if they paid a dividend apple would pay Corp tax AND the share holder would pay cap gains. A buy back avoids the Corp tax and let's the shareholder delay paying (until they sell) and also pay a lower rate if they're careful (long term holdings I think get a lower rate, 10% I think?). There is another reply here saying Corp tax is still due. I didn't think it was but I'll check after dinner.
  - ClumsyPilot 5y ago
    If my shares are handled by an LTD I'll never pay tax because i will keep reinvesting that monet.
    - LatteLazy 5y ago
      You'd pay once you took the money out right?
goodcanadian 5y ago
Share buybacks are not a business expense. They are paid out of after tax income; they are not tax deductible.
jacobr1 5y ago
The classic offshore approach is that Apple USA doesn't make any profit because they find a way to make the accounting work such that Apple Ireland actually made the profit. It only becomes income or dividends when it gets transferred back to the USA. An example might be to assign the patent ownership for the new M1 chips to the Ireland subsidiary. Sell them for $1. Then charge the USA based firm $1 billion in licensing costs. Make $1 billion in income selling the chips. Boom $0 profit. Except now there is massive profit in the Ireland subsidiary, which can pay very low taxes. The problem is that the money is stuck there. If they give it back the parent company as a dividend, then that is income to the parent.
- dantheman 5y ago
  Then it's spent in ireland and it's why ireland has a tech industry.

mwint 5y ago

Apple might make no profit, but wouldn't the shareholders selling their stock back to Apple have to report the sale as capital gains? So (at least some) taxes would be paid on that money, just not by Apple directly.

LatteLazy 5y ago
So, if they paid a dividend apple would pay Corp tax AND the share holder would pay cap gains. A buy back avoids the Corp tax and let's the shareholder delay paying (until they sell) and also pay a lower rate if they're careful (long term holdings I think get a lower rate, 10% I think?). There is another reply here saying Corp tax is still due. I didn't think it was but I'll check after dinner.
- ClumsyPilot 5y ago
  If my shares are handled by an LTD I'll never pay tax because i will keep reinvesting that monet.
  - LatteLazy 5y ago
    You'd pay once you took the money out right?

goodcanadian 5y ago

Share buybacks are not a business expense. They are paid out of after tax income; they are not tax deductible.

jacobr1 5y ago

The classic offshore approach is that Apple USA doesn't make any profit because they find a way to make the accounting work such that Apple Ireland actually made the profit. It only becomes income or dividends when it gets transferred back to the USA. An example might be to assign the patent ownership for the new M1 chips to the Ireland subsidiary. Sell them for $1. Then charge the USA based firm $1 billion in licensing costs. Make $1 billion in income selling the chips. Boom $0 profit. Except now there is massive profit in the Ireland subsidiary, which can pay very low taxes. The problem is that the money is stuck there. If they give it back the parent company as a dividend, then that is income to the parent.

dantheman 5y ago
Then it's spent in ireland and it's why ireland has a tech industry.