Apple finds itself in unfamiliar territory. Accustom to acting behind the scenes and producing gadgets with overwhelming appeal, the iPhone maker and its CEO Tim Cook are front-and-center in a debate over corporate taxes and how some companies navigate loopholes in the laws to keep billions from the IRS.
In a sign of how concerned Apple is about changing the U.S. tax landscape, it in 2013 may spend nearly $4 million on lobbying Congress – double the amount of just a year ago. Meanwhile, European leaders are asking tech giants to play by the rules…
Apple “is on pace to nearly double” the almost $2 million it spent in 2012 on Washington lobbying, up from $180,000 Apple spent on influencing federal legislation in 1999, reports Reuters.
Earlier this week, Cook was in the hot-seat as he testified before a Senate subcommittee which charged the consumer electronics brand avoided paying $9 billion in U.S. taxes (Apple later posted Cook’s opening statement.)
The company’s efforts to avoid paying U.S. taxes came to light following the company’s decision to borrow money, rather than repatriate some of its $100 billion horde of cash held outside the country.
According to Reuters, a total of $1.5 trillion is held in offshore bank accounts by U.S. companies. Apple had backed proposed legislation that would have let U.S. companies bring the cash back home without paying a 35 percent corporate tax rate.
While Apple’s decision to almost double its lobbying spending indicates the company cares about tax reform, the firm’s efforts are overshadowed by the huge budgets of other tech firms active in Washington. Google spent $16.5 million in 2012 and Microsoft spent $8.1 million last year.
Like Apple now, Microsoft had little interest in lobbying – until the Department of Justice began moving to breakup the software giant due to antitrust concerns.
“Apple’s minimal Washington presence could have put it in the crosshairs of the Senate,” Reuters reports, citing lobbyists. While such talk could be dismissed simply as K-Street trying to gin up more business, Apple has also refused to create a PAC, a powerful tool which allows corporations to financially reward Congressional allies.
In outlining its case against the iPad maker, the Senate subcommittee on Monday said “Ireland has essentially acted as a tax haven for Apple.”
Apple’s subsidiary in Ireland oversees the company’s retail efforts throughout Europe. However, the company has paid no corporate income tax, according to the Senate report cited by Reuters.
Additionally, Apple paid just 1.9 percent on $37 billion in overseas profit, although the average tax rate within the Organization for Economic Co-operation and Development was 24 percent in 2012.
Irish Prime Minister Enda Kenny refuted there was any special arrangement for Apple.
“Ireland does not, I will repeat, does not do special tax rate deals with companies; we don’t have any special extra-low corporate tax rate for multinational companies,” the news service quoted Kenny.
Taking a similar tact privately, British Prime Minister David Cameron Monday spoke to a business advisory group that also included Google’s Executive Chairman Eric Schmidt. His message: pay taxes that are owed the British government.
“As part of having very low corporation tax, he expects companies who are due to pay tax, to pay that tax,” an unnamed UK government official told the news gathering organization.