Home / Others / Apple, taking advantage of the new tax law, plans to bring billions in cash to the United States

Apple, taking advantage of the new tax law, plans to bring billions in cash to the United States



Apple estimated that its direct impact on the US economy would total more than $ 350 billion over the next five years, but it is not clear how much it goes beyond what the company would have spent anyway. The current pace of Apple spending in the United States is $ 55 billion for 2018, so it was already on track to spend $ 275 billion over the next five years. After subtracting the $ 38 billion tax payment, that leaves your new investment at approximately $ 37 billion over the next five years.

A. M. Sacconaghi, a financial analyst at Sanford C. Bernstein, said that Apple had constantly spent tens of billions of dollars in areas such as personnel and capital expenditures in recent years. Recover the money abroad, he said, recently to help its expansion. But it makes the company appear to respond to Mr. Trump's call for more jobs to be created in the United States.

"This is Apple's best, consistent with the administration's goals," said Sacconaghi. [19659004] Apple is one of several multinational giants that have kept a total of approximately $ 3 billion in global profits from their national books to bypass the previous corporate tax rate of 35 percent. Under the new tax law, companies that perform a single repatriation of cash will be taxed at a rate of 15.5 percent on cash holdings and 8 percent on illiquid assets. That's lower than the new corporate rate of 21 percent. And under the new tax code, Apple would also have been taxed if it returned the money or not.

By changing the money under the new terms, Apple has saved $ 43 billion in taxes, more than any other US company, according to the Institute of Taxation and Economic Policy, a research group in Washington.

Other giants of technology will do the same in the coming months. Companies like Microsoft, Alphabet and Cisco also changed their profits to offshore companies, avoiding billions of dollars in taxes, and are now in a better position to recover the money.

Although Republican supporters of the tax law argued that the inflow of international profits would create jobs and increase wages, many economists did not agree that a single repatriation would have a substantial impact on real investment.

Apple's announcement, drafted as a huge investment in the United States instead of huge financial gain, followed years of criticism that the company did not do enough for the US economy because it manufactures most of its products in China and parked its profits abroad.

During the past year presidential campaign, Apple was a frequent target of Mr. Trump, who promised that as president he would force the company to start making iPhones and Macs in the United States. While that has not happened and is unlikely to do so, Apple has launched a charming offensive to prove its value to the American economy.

The company has highlighted the number of jobs created by the so-called application economy, an ecosystem of software and services that run on the iPhone and other Apple products. Last year, Apple also said it was creating a $ 1 billion fund to invest in advanced manufacturing in the United States. On Wednesday, Apple said it was increasing the size of that fund to $ 5 billion and noted that it already supported manufacturer projects in Kentucky and Texas.

Apple, which is headquartered in Cupertino, California, also pulled out a page of Amazon's public relations strategy on Wednesday by saying it will open a new national campus in a place where it currently has no operations. Amazon got goodwill across the country last year when it announced plans to open a second corporate headquarters outside of its Seattle headquarters.

Currently, Apple has about 84,000 employees in the United States, so 20,000 new jobs would increase by 24 percent. The company added that it would invest more than $ 30 billion in capital expenditures, or spend in parts and the equipment required to produce them, during the next five years in the United States.

For a comparison, Apple spent $ 14.9 billion on capital expenditures in the last fiscal year, although it did not specify how much it spends alone in the United States.

For Apple, repatriating cash creates opportunities that could include acquisitions and greater dividends for shareholders. The company had previously chosen to borrow money to finance its stock and dividend buybacks, instead of withdrawing its money from abroad. In the last five years, Apple has returned $ 233 billion in cash to shareholders through repurchases and dividends.

Paying $ 38,000 million in taxes now is unlikely to force Apple's checkbook because the company had already allocated $ 36.4 billion in anticipation that it would eventually have to pay taxes on its profits overseas.

"From a financial perspective, it's going to be a nonevent," said J. Richard Harvey, a law professor at Villanova University and a former Internal Revenue Service official. Other companies are not as prepared, he said, and would probably have to suffer a significant loss if they made a single repatriation of cash.

Apple employees will also see the benefits. Mr. Cook said in an email to staff on Wednesday that Apple was increasing investment in its employees by rewarding them with $ 2,500 in restricted stock units, according to people familiar with the matter, who asked not to be identified because the plans They were not public. Apple joins other companies, such as AT & T, which issued employee bonuses since the tax law was signed.

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