Apple earned $36.8bn in 2012, paid only 1.9 percent overseas tax

Summary:Despite generating more than $36 billion in overseas profit in 2012, the iPhone and iPad maker paid less than 2 percent tax on that figure, adding Apple firmly to the burgeoning list of companies employing tax avoidance schemes.

Apple has paid only 1.9 percent tax on its overseas profits during 2012, according to the firm's latest 10-K filing with the U.S. Securities and Exchange Commission (SEC).

On non-U.S. profits of $36.87 billion (£23.1bn) for the 2012 fiscal year ending September, Apple paid only $713 million (£445m) in overseas tax, or about 1.9 percent in total.

That figure is only a fraction of what the company paid compared to corporation tax of 25 percent in the U.K., and around 35 percent in the United States.

Stateside, where the California-based technology giant is based, Apple paid $12.3 billion (£7.7bn) in federal taxes on profit generated in the U.S., and just under $1.1 billion (£689m) in state taxes.

First reported by The Times of London (paywalled), while Apple has not broken any laws by using morally bankrupt techniques in order to appease its shareholders and investors at the expense of ordinary taxpaying citizens around the world -- many of which are Apple customers that pay a premium in order to own the array glorified shiny rectangles -- it's likely to spark up the debate over firms unfairly using such schemes to avoid paying into their host nation's coffers, particularly at a time when the global economy teeters once again on the brink of collapse.

Apple, like other companies, tend to leave their profit-generated cash overseas because the repatriation costs would result in 35 percent taxes applied once the money is brought back to the United States.

Google, Amazon, and Starbucks have all been accused of using tax havens, such as Ireland, Switzerland and Luxembourg, in order to lower their overall tax bills where corporation tax is significantly lower than other countries, such as the U.K. and the United States. 

In the U.K., while its parliamentary committees investigate a string of mostly technology companies, the government continues to do nothing on fixing the tax loopholes that allow these major companies to get away with paying so little into the U.K. Treasury's kitty.

A few weeks ago, ZDNet reported that the main U.K. subsidiaries of the major technology companies are  using legal albeit morally void schemes to avoid paying the corporation tax .

While Amazon, Apple, IBM, Facebook, Google, and Microsoft -- which made a collective 2011 U.K. revenue of £5.32 billion ($8.49bn), the six companies each paid only a fraction of the U.K. corporation tax they should have done -- as much as Apple's 7.8 percent in 2011, compared to Amazon's 0.4 percent. 

A U.K. parliamentary committee will grill Google, Amazon and Starbucks later today, reports The Guardian. "We want to ask them for an opportunity to explain why they don't pay proper levels of tax in the U.K.," said Margaret Hodge MP, chair of the parliamentary committee on public accounts.

Apparently Google U.K.'s managing director Matt Brittin -- which  according to ZDNet research  only paid 1.8 percent in corporation tax in the U.K. in 2011 -- was "too busy" to attend the committee, the London-based newspaper reported.

Topics: Apple, EU, iPad, iPhone, Legal, Tech Industry, United Kingdom

About

Zack Whittaker writes for ZDNet, CNET, and CBS News. He is based in New York City.

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