Tim Cook to Testify on Offshore Tax Practices in Senate Investigation
Apple CEO Tim Cook is said to be giving a testimony to the U.S. Senate Permanent Subcommittee on Investigation pertaining to how the Cupertino California company deals with taxes. The topic has been widely debated as Apple is thought to have about $100 billion in offshore funds. While its known that the Senate will be holding a hearing next week, POLITICO is reporting that Cook himself will be present to give testimony, possibly answering questions in the same vein as those answered by representatives from HP and Microsoft. The senate hearing is a continuation of the panel’s investigation into how the practice of keeping profits offshore affects U.S. taxes.
It’s been widely known that large domestic corporations such as Apple have taken to hoarding cash away from U.S. shores to avoid paying high tax rates on overseas earnings. For example, recent analysts from The Wall Street Journal found 60 such companies held a combined $166 billion in earnings offshore in 2012. Under U.S. tax law, companies can effectively sidestep paying the government more than 40% of their annual profits by not repatriating the money.
Pointing to Apple’s huge offshore cash pile, the company chose to take on debt by issuing bonds to finance a planned stock buyback, despite having $150 billion in cash and equivalents. This tactic will allow Apple to avoid an estimated $9.2 billion tax hit if it were to bring the money needed for the buyback into the U.S. According to the publication, representatives from the Treasury Department, Internal Revenue Service and other tax experts will all be testifying at the hearing. A full witness list, which would include Cook, should technically be published by Friday. We’ll have to wait and see what comes of the whole ordeal though.