The third installment in the very insightful and popular NYT iEconomy series is front page of the Sunday NYT.
Some of the details of Apple’s corporate tax-avoidance maneuvers according to the NYT are:
• Apple’s federal tax bill was $3.3 billion on reported profits of $34.2 billion last year, a tax rate of 9.8%;
• Apple allocates 70% of its profits outside the U.S. note that the value is created in the US, but the low end manufacturing is overseas.
• A Nevada shell company let’s Apple’s U.S. business sidestep California state taxes. California corporate tax rate = 8.84%, while Nevada = 0%.
• California gives tax credits to Apple for conducting R&D in the state worht more $400 million since 1996;
• The “Double Irish With A Dutch Sandwich” routes royalties and profits through Ireland and the Netherlands and the Caribbean. On paper, Ireland “generated” one-third of Apple’s revenue last year.
• Salespeople working in high-tax countries are employed by subsidiaries in low-tax countries.
• iTunes sales “happen” in Luxembourg –– a tax dodge with local incentives. In 2011, iTunes S.à r.l.’s revenue exceeded $1 billion
The full series is Pulitzer bait, and deservedly so.
Click thru for giant graphics
How Apple Sidesteps Billions in Taxes
CHARLES DUHIGG and DAVID KOCIENIEWSKI
NYT, April 28, 2012