The newspaper reports that Apple uses a small office in Reno, Nevada, just over 300km from its headquarters in Cupertino, California, to “collect and invest the company’s profits” and sidestep “state income taxes on some of those gains”.
Nevada does not have a corporate tax, but California’s corporate tax rate is 8.84 percent.
According to The New York Times, Apple also has “subsidiaries in low-tax places like Ireland, the Netherlands, Luxembourg and the British Virgin Islands – some little more than a letterbox or an anonymous office – that help cut the taxes it pays around the world.
Apple’s accountants have found legal ways to allocate about 70 percent of its profits overseas, where tax rates are often much lower,” the newspaper went on.
“As it stands, the company paid cash taxes of $3.3 billion around the world on its reported profits of $34.2 billion last year, a tax rate of 9.8 percent. By comparison, Wal-Mart last year paid worldwide cash taxes of $5.9 billion on its booked profits of $24.4 billion, a tax rate of 24 percent, which is about average for non-tech companies.”
Former US Treasury Department economist Martin A Sullivan told the paper he believed Apple would have paid $2.4 billion more in taxes last year without such practices.
A large amount, considering a report by the Public Policy Institute of California in December last year, which said that government support of disadvantaged Californians in the form of unemployment compensation and welfare has increased across all income categories in recent years.
In a statement to The New York Times, Apple said it “pays an enormous amount of taxes, which help our local, state and federal governments. In the first half of fiscal year 2012, our US operations have generated almost $5 billion in federal and state income taxes, including income taxes withheld on employee stock gains, making us among the top payers of US income tax.”
The company added that it “has conducted all of its business with the highest of ethical standards, complying with applicable laws and accounting rules”.