Apple CEO wants Trump’s repatriation tax made mandatory
Tim Cook, tech giant Apple’s CEO, has called for President Trump’s proposed repatriation tax, which aims to bring money from offshore income back into the US, to be mandatory for all US companies
9 Jun 2017
Trump’s latest tax plan proposes requiring US companies to pay a one-off 10% tax on their offshore income, a tax break which was last offered in 2005. Currently, the US applies a 35% corporation tax to global earnings and not just US income, but companies can defer paying tax on their overseas income until they return the earnings to the US.
Apple, alongside companies such as Starbucks, Microsoft and Amazon, defer these bills by keeping their global income offshore. Last year Apple reserved $15.8bn for income taxes on a $59bn income.
Cook said: ‘It should be a required tax, and so you’re not asking the people that have had earnings from their international subsidiaries if they’d like to bring back money. You’re saying that, you must pay the government X percent now or over some period of time.’
Cook has also called for the proceeds of the repatriation tax to be spent on upgrading the US infrastructure to create jobs.
Repatriated tax has been tried in the US before under George W Bush in 2004. Kevin Phillips, international tax partner at Moore Stephens, said: ‘The American Jobs Creation Act reduced the tax rate on such profits to just 5.25%. As a result, 843 corporations took the opportunity to repatriate about $362bn (£284bn) in 2005 – around five times the normal level.
‘However, the evidence is that, despite promises at the time, very little of this was used by the companies concerned for increased investment in the US: around 92% was returned to shareholders in the form of share buybacks and dividends, despite provisions in the Act that supposedly prevented the funds being used for that purposes.’