Apple has announced that it will bring back to the United States much of the more than $ 250 billion it has long held abroad, accumulated through a complex system of transfers in so-called tax havens to pay less taxes, a practice common to many multinationals. The return of capital will allow Apple to make a series of new investments in the United States and is one of the largest operations of its kind in the history of the US tax authorities. The decision was welcomed and seen as an opportunity for the US economy, but many have pointed out that Apple will pay less for this transaction than it would have had to pay under previous tax laws.
For its operation, Apple will take advantage of part of the tax reform wanted by President Donald Trump, which gives the possibility to large companies to bring their capital back to the United States with a facilitated taxation without having to pay large penalties. The system is similar to the tax amnesties we have been used to in Italy in the past years. It is estimated that Apple has about 94 percent of its cash holdings overseas, totaling $ 269 billion. Taking advantage of the new law wanted by Trump and the Republicans, the company will be able to repatriate its capital by paying 38 billion dollars. The figure is huge, one of the largest ever paid for this type of operation, but it still has to be considered against the hundreds of billions of dollars that Apple plans to bring back to the United States. Thanks to the new rules, the company is estimated to have saved around 43 billion dollars in taxes.
In recent years, observers and politicians have harshly criticized Apple for the complex systems it used to amass its revenues abroad, in countries where taxation is more favorable. The company's CEO, Tim Cook, had also attended a hearing before a US Senate committee, defending his company's tax practices. For years, Apple had also argued that it would not have repatriated its capital if there had not been a change to the US tax regime first, because such an initiative would have proved too expensive for the company.
Trump's criticized tax reform has now given Apple the ideal tool to carry out its operation, even if the president is never mentioned in the statement announcing the initiative. For his part, Trump claimed the importance of the new tax laws for the operation announced by Apple, writing on Twitter that he had kept his promise to “allow companies like Apple to bring huge amounts of money back to the United States”.
I promised that my policies would allow companies like Apple to bring massive amounts of money back to the United States. Great to see Apple follow through as a result of TAX CUTS. Huge win for American workers and the USA! https://t.co/OwXVUyLOb1
– Donald J. Trump (@realDonaldTrump) January 17, 2018
In the statement, Cook writes that Apple has: “A great sense of responsibility in giving back something to our country and to the people who help us succeed.” According to the firm's estimates, the return of capital will translate into an economic opportunity for the United States worth $ 350 billion over the next 5 years. However, it is not clear how much Apple would have spent alone and if there had not been the possibility of taking advantage of the amnesty. For this year, analysts had already forecast Apple spending in the United States around 55 billion dollars, so in 5 years it would probably have spent a figure similar to what it is promised now.
Apple also announced that it will spend part of the money to build a new campus, not necessarily near its historic headquarters in Cupertino (California), to hire at least 20,000 people and for other investments related to research and product development. The company currently employs about 84,000 people in the United States, so the operation is expected to lead to a 24 percent increase in the number of employees.
In the last period, Apple had already set aside about 36.4 billion dollars, evidently in view of the payment of taxes to bring its capital back to the United States. From a financial point of view, analysts say, the initiative will therefore not have major repercussions on the company, which continues to be one of the richest in the world. The company intends to offer its employees bonuses of up to $ 2,500 in stock.
In the coming months, other large tech companies are likely to take similar initiatives to bring their capital to the United States. Among these should be Microsoft and Alphabet, the holding company that owns Google, which in recent years have amassed large amounts of money abroad to avoid taxation in the United States. Trump has always argued that his tax reform would bring new jobs and employee benefits, but most economists believe there will be no major benefits to them or tangible consequences on the amount of investment in the United States.
