Sunday, April 29, 2012

How Apple Sidesteps Billions in Taxes Legally and their justification

Image Credit: Techreport

There is a really interesting report by the NYTimes about how Apple keeps taxes low on $35b in profit. The basic strategy is that they set up small offices around the world to collect and invest the companies profits. The places they choose to do this are countries or states where corporate tax is not as heavy as in other places. A good example would be an office in Reno, Nevada where the corporate tax rate is zero. California’s corporate tax rate is 8.84 percent. Whereas Nevada’s? Zero. Places like these are where Apple creates offices to sidestep taxes legally. Similarly Apple has offices in other countries which are tax heavens like Ireland, the Netherlands, Luxembourg and the British Virgin Islands. All have low tax rates. The finding by the newspaper actually show how Apple has been industrious and have done it all legally.

Apple has responded to this criticism and this is what they have to say. They say that they have created a vast number of jobs over the years and a majority of those jobs have remained in the united states. And that by focusing on innovation they have created entire new industries and products. They also spoke about Apps and how US app creators have benefited vastly from the opportunity provided by Apple. They also admit that they do pay a huge amount of taxes locally and they they have contributed to many charitable causes without going public about it. 

So when the NY Times accused them of avoiding taxes the company responded about job creation and innovation. Apple also said they they have conducted all their business with the highest ethical standards. Please sound us off in the comments section below with what you think. 
NY Times report and Apple's response

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