18 Jan 2018

Apple to pay US tax on foreign cash

4:55 pm on 18 January 2018

Apple will pay about $NZ52bn in tax on the roughly $344bn cash pile it holds outside the US following recent changes to American tax rules.

Apple logo

Apple logo Photo: (Medhat Dawoud via unsplash.com)

The sum is expected to be the biggest payment under the reforms, which slash the US corporate tax rate.

The tech giant also plans to build a new campus and create 20,000 new jobs in the US.

Apple said its plans would contribute more than $US350bn to the US economy over the next five years.

The company has not said how much of its cash abroad would be brought back to the US.

Last year, the New Zealand Herald reported the tech giant had paid no local tax here in the last decade, despite selling $NZ4.2bn of products in that time.

Chief executive Tim Cook said Apple is "focusing our investments in areas where we can have a direct impact on job creation".

Apple employs about 84,000 people in the US and expects to spend $US55bn with domestic suppliers and manufacturers this year.

The company has data centres in seven states. On Wednesday, it broke ground on an expansion of its operations in Reno, Nevada.

It plans to spend more than $US10bn on data centres over five years, as part of a $US30bn capital spending plan for the US.

Apple is the latest company to promote plans to invest in America following the overhaul of the US tax code.

The changes cut the corporate rate from 35 percent to 21 percent. They also stopped applying the corporate rate to profits that companies make overseas, in exchange for a one-off tax payment.

US President Donald Trump had argued the cuts would make the US more competitive and spur domestic companies to invest at home.

House Speaker Paul Ryan, a Republican congressman who spearheaded the tax overhaul, celebrated Apple's plans to invest in a post on Twitter.

"This is great news for the American economy and for America's workers," he said.

Opponents to the new tax law predicted much of the money firms saved from the cuts would go to share buybacks and higher dividends.

Apple has previously called for simplification of US tax rules, amid criticism of its large overseas cash holdings and investigation by US tax authorities.

The company's announcement of its planned investments comes as tech firms face questions from competition regulators, as well as calls to make devices less addictive.

Apple is also facing legal action over its deliberate slowing of older iPhones.

The firm reported nearly $US230bn in sales and more than $US48bn in profit for the 12 months ended 30 September.

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