Apple tops U.S. companies 'exploiting' global tax havens

Apple sits atop the list of U.S. companies that are taking advantage of global tax havens, according to the Center for Tax Justice's analysis of SEC filings. 

U.S. multinationals in the Fortune 500 doubled the assets they hold in foreign subsidiaries between 2008 and 2014, taking advantage of loopholes in U.S. and foreign laws to keep $2.1 trillion out of sight of tax authorities, the report says.  As for Apple, it held $70 billion more held offshore in 2014 than in 2013, the Center for Tax Justice says. 

"Apple has booked $181.1 billion offshore — more than any other company," says the report. "It would owe $59.2 billion in U.S. taxes if these profits were not officially held offshore for tax purposes. A 2013 Senate investigation found that Apple has structured two Irish subsidiaries to be tax residents of neither the United States, where they are managed and controlled, nor Ireland, where they are incorporated. This arrangement ensures that they pay no tax to any government on the lion’s share of their offshore profits."

Not that our favorite tech company is alone. The report says that most of America’s largest corporations maintain subsidiaries in offshore tax havens. At least 358 companies, nearly 72 percent of the Fortune 500, operate subsidiaries in tax haven jurisdictions as of the end of 2014.

The Center for Tax Justice says that Congress "can and should take strong action to prevent corporations from using offshore tax havens, which in turn would restore basic fairness to the tax system, reduce the deficit and improve the functioning of markets." The organization, founded in 1979, is a public interest research and advocacy organization focusing on federal, state and local tax policies and their impact upon the U.S.

Some politicians have blasted Apple and other companies for their tax policies. However, in May 2013, Apple CEO Tim Cook released a statement to the U.S. Senate defending the company's tax policies. In part the statement read:

"Apple is likely the largest corporate income tax payer in the US, having paid nearly $6 billion in taxes to the US Treasury in FY2012. These payments account for $1 in every $40 in corporate income tax the US Treasury collected last year. The Company’s FY2012 total US federal cash effective tax rate was approximately 30.5%.1 The Company expects to pay over $7 billion in taxes to the US Treasury in its current fiscal year. In accordance with US law, Apple pays US corporate income taxes on the profits earned from its sales in the US and on the investment income of its Controlled Foreign Corporations (“CFCs”), including the investment earnings of its Irish subsidiary, Apple Operations International (“AOI”).

"Apple does not move its intellectual property into offshore tax havens and use it to sell products back into the US in order to avoid US tax; it does not use revolving loans from foreign subsidiaries to fund its domestic operations; it does not hold money on a Caribbean island; and it does not have a bank account in the Cayman Islands. Apple has substantial foreign cash because it sells the majority of its products outside the US. International operations accounted for 61% of Apple’s revenue last year and two-thirds of its revenue last quarter. These foreign earnings are taxed in the jurisdiction where they are earned (“foreign, post-tax income”).