Yahoo Finance Apple Defends Corporate Tax Arrangements
Tech giant Apple (NasdaqGS: AAPL - news) has defended its tax arrangements in the United States, ahead of a Congressional report into corporate finance structures.
In a statement Apple said it paid "an enormous amount of taxes" to local, state and federal authorities.
It added: "In fiscal 2012 we paid $6bn (£3.73bn) in federal corporate incomes taxes, which is 1 out of every 40 dollars in corporate income taxes collected by the US government."
Apple's statement was prompted by the year-long Senate Permanent Subcommittee on Investigations inquiry into at least six of America's leading technology firms.
The report, which also addresses the arrangements used by Microsoft (NasdaqGS: MSFT - news) , Hewlett-Packard, Google (NasdaqGS: GOOG - news) and some biotech firms, is expected to be released shortly.
According to the New York Times, Apple has become a central focus of the inquiry.
It said Apple, the world's most valuable tech company, had helped pioneer offshore tax structures in the 1970s through Irish, Dutch and Caribbean subsidiaries.
The paper said: "Although the majority of Apple’s executives, product designers, marketers, employees, research and development operations and retail stores are in the US, in the past Apple’s accountants have found legal ways to allocate about 70% of the company’s profits overseas, where tax rates are often much lower, according to corporate filings."
Last year MPs on the Public Accounts Committee grilled executives from Starbucks, Amazon and Google over the low level of their UK corporate tax rates.
It emerged that Starbucks paid £8.6m UK tax over 13 years on sales of £3.1bn, while Google paid £6m in tax for 2011 on sales of £395m.
Amazon was also revealed to have paid no UK corporation tax in 2011 although it amassed sales of £3.3bn in the year.
Starbucks, which has built an image of being an ethically-minded firm, responded to a UK consumer backlash by offering £10m to HM Revenue and Customs for the tax year.
During the US inquiry's hearing in September, Senator Carl Levin indicated that Apple had deferred taxes on at least $35bn (£29bn) of offshore income during two years.
Apple responded to the increasing clamour over corporate tax by saying it was "one of the top corporate income taxpayers in the country, if not the largest".
The company added that it "conducted all of its business with the highest of ethical standards, complying with applicable laws and accounting rules".
Ex-Treasury Department economist Martin Sullivan told the newspaper: "Apple went out of its way to try and ensure that its tax savings didn't attract too much public attention.
"Because tax avoidance of that magnitude - even though it’s legal and permissible - isn't in keeping with the image of a socially progressive company."
Apple's image of social responsibility has also suffered recently through revelations about worker conditions at sub-contractor Foxconn's facilities in China.
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