Tim Cook expected to testify in Senate hearing on offshore tax practices next week

By , May 15, 2013

courtroom gavel

In a recent bond offering, Apple took on billions of dollars in debt in order to finance an initiative to return some of its cash to shareholders. Its plan is to give $100 billion back to investors, by way of dividends and stock buybacks, by 2015.

Since most of its cash is offshore, Apple’s decision to take on debt instead of tapping its own $150 billion cash pile helped it sidestep an estimated $9 billion in taxes. Unfortunately, it’s also caught the attention of the US government…

Politico is reporting that Apple’s offshore tax practices are to be target of a Senate legal proceeding next week. The site has learned that Tim Cook will testify at the Senate Permanent Subcommittee on Investigation’s hearing next Tuesday.

The Subcommittee is part of the Homeland Security and Government Affairs office, and the hearing is listed as “Offshore Profit Shifting and the U.S. Tax Code – Part 2″ on the HSGA website. Here’s an excerpt from the agenda for the meeting:

“The Subcommittee will continue its examination of the structures and methods employed by multinational corporations to shift profits offshore and how such activities are affected by the Internal Revenue Code and related regulations. Witnesses will include representatives from the Department of the Treasury, the Internal Revenue Service, representatives of a multinational corporation, and tax experts.”

Apple’s not the only company that does what it can to avoid paying taxes—both Microsoft and HP testified in similar hearings last year. But with more than $100 billion of its wealth sitting outside of the United States, it’s at the forefront of the debate.

Politico received a statement from Apple spokesman Steve Dowling:

“Apple is one of the largest taxpayers in the United States, having paid $6 billion in federal corporate income tax in fiscal 2012,” Dowling said in a statement. “We also help create hundreds of thousands of jobs in the U.S. by keeping our R&D in California and creating category-defining products like the iPhone, iPad and the app store, which has generated billions of dollars in sales for software developers.”

The hearing is set for Tuesday, May 21, 2013, at 9:30 a.m, and is in Room 106 of the Dirksen Senate Office Building if you’re in the area. And although it’s believed Cook will testify, the HSGA says that an official witness list won’t be available until Friday.

What do you think about all of this? Is Apple in the wrong here?

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  • http://twitter.com/imperiumSG Andy M.

    Interesting article.

  • bigzjoseph

    It’s not about its so does not matter to me

    • http://www.facebook.com/profile.php?id=100001809600195 Nada Tosnas

      What??

  • wheebang

    I love Steve Dowling’s comments – it’s paramount to blackmail against the US Government, making it sound like Apple can shift it’s R&D and Software Development overseas at any time, losing even more tax revenue for the US and not to mention thousands of jobs, if they are pushed into paying taxes on their overseas accounts.

  • http://www.facebook.com/people/James-Hart/1553850615 James Hart

    Maybe what should be at the forefront of the debate is the high corporate tax. That’s why companies go offshore.