Apple agrees to pay $38 billion in taxes on repatriated profits

Kelley Robertson
January 20, 2018

"Let me be clear, there are large parts of this that are a result of the tax reform, and there's large parts of this that we would have done in any situation", Cook said on ABC's World News Tonight with David Muir. However, it appears that the company has chose to bring all of that money to the United States now that a new tax law has been passed.

Apple's (NASDAQ:AAPL) plan to repatriate overseas cash and pay $38B in US taxes doesn't reduce its $16B European Union tax bill. Apple also said it would invest or spend on purchases some $350 billion in.

Analysts have predicted that most of those overseas profits will flow into stock buybacks and dividend payments.

The iPhone-maker announced a five-year investment plan, which, combined with its tax payments, will equal $350 billion in total spending within the United States.

The location of the new campus - which will initially house technical support for customers - will be announced later this year.

Apple said on Thursday that it will not hold a bidding process when it chooses the site for a planned new USA campus, marking a stark difference from the public contest that Amazon.com has held for its second headquarters.

The tech company's giant Foster + Partners-designed campus has barely finished, but Apple already has its sights on another construction venture - away from its headquarters in Cupertino, California. Additionally, the press release said that "capital expenditures in the United States, investments in American manufacturing over five years and a record tax payment upon repatriation of overseas profits will account for approximately $75 billion of Apple's direct contribution".

In 2017 approval of U.S. leadership fell by double digits in nearly half of the 134 countries and areas surveyed by Gallup
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The pledge announced Wednesday comes less than a month after Congress approved a sweeping overhaul of the US tax code championed by President Donald Trump that will increase corporate profits.

Apple has announced a five-year, $30 billion investment plan that will fund a new United States campus, as well as paying the U.S. government $38 billion in taxes when it repatriates more than $250 billion in profits made outside of the US.

Apple had set aside US$36.3 billion in anticipation of tax payments on its foreign cash, meaning the payment would not represent a major impact on its cash flow this quarter.

Since Trump's election, corporations have gone out of their way to underscore how the administration's policies have benefited the country - including touting as a result of the new tax law. The company has in excess of $250 billion held overseas.

Apple also plans the further expansion of its educational initiatives for teachers, along with the ConnectED program, keeping in mind the aim of boosting coding skills among pupils.

Under the new tax law, companies that make a one-time repatriation of cash will be taxed at a rate of 15.5 per cent on cash holdings and 8 per cent on non-liquid assets. The company didn't say how big the second campus will be, or how numerous additional 20,000 workers that it plans to hire will be based there.


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