Legit News
Apple Hides Billions in Profit Using Phantom Taxes
On Tuesday, Apple is due to report its second quarter financial results, which analysts will be expecting a net income (profit) of $9.8billion. However, regardless of what it reports, it will not be its true profit, since it hides some of it with an unusual tax manoeuvre. The true profit could even be around $10 billion higher, too.
Apple is already the world's most valuable company and understates its profits compared to other multinational companies. The way it's doing it, is by setting aside a portion of its overseas profits, marking them as subject to US taxes at some point in the future, when they repatriate the money. However, it doesn't actually bring the money to the US, instead just recording a tax liability against it, then subtracting that liability from its profits, despite never actually paying these taxes. Also, while the money is sitting abroad, it unsurprisingly uses various accounting techniques to move it around different countries, to minimise the tax that it pays to the countries where it sells its products. There's a lot more detail on Apple's interesting accounting practices at the link below.
Just like other corporations, Apple leaves cash overseas. If it brought it home to the U.S., it would have to pay federal income taxes on the money (though it would get a credit for foreign taxes already paid). In Apple's case, those overseas accounts have grown to a staggering $74 billion — equal to the market value of Citigroup Inc.
Posted by | Tue, Jul 24, 2012 - 05:43 PM
Socialize