Apple has paid between an 18% and 19% cash tax rate the past four years — or about 70% of its reported tax rate, according to Chuck Jones, a wealth strategist with Northern Trust.
“There is a lot of confusion about how much tax Apple pays,” he writes in a Seeking Alpha article. “While it is difficult to estimate how much it pays in various geographies and to which government entities (federal, state and local) it is easy to determine how much it pays out in cash on a quarterly and yearly basis. All one needs to do is to look at its cash flow statements.”
Apple's total cash tax rate has been between 18% and 19% the past three years. In fiscal 2013 Apple paid out $9.1 billion in total cash taxes for an 18.2% rate on its operating income. This increased to $10 billion and an 18.7% rate in fiscal 2014 and $13.2 billion or 18.3% in fiscal 2015. For the first three quarters of fiscal 2016 it has paid just under $9 billion in taxes for an 18.3% rate.
Jones says there are various reasons that a company's reported tax rate is less than its cash taxes with different depreciation schedules used for income statements vs. tax filings being one of them. For the past three fiscal years Apple's cash taxes have been 70%, 72% and 69%, respectively, of its reported tax expense of 26.2%, 26.1% and 26.4%. For the first three quarters of fiscal 2016 it is 72% on a 25.5% rate.
One of the reasons that Apple's net cash on the balance sheet has increased to over $146 billion ($231 billion when you remove the $85 billion of debt) is that the company has "saved" almost $25 billion in cash of the past five years. This is the difference between its reported tax payment and actual cash outlays. While most of the $25 billion that has been "saved" is overseas it does help Apple borrow money to buyback stock and to a lesser degree pay dividends, Jones notes.