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  • Apple's Annual Earnings Could Be Reduced by 10% with Changes to Irish Tax Laws


    If the European Commission were to carry out a 12.5% tax on all of Apple’s earnings that run through Ireland, the Cupertino California company’s annual earnings would be reduced by roughly 10%, a new “worst-case scenario” according to the analysis. In a research note that was issued to investors by JP Morgan Chase analyst, Rod Hall, Hall did the math that the revisions to Ireland’s tax code might have on Apple, noting the probe of the Irish tax laws could have a noteworthy effect on the company’s bottom line.

    As part of his reported “worst-case scenario,” Hall sees Apple assuming a full Irish tax rate of 12.5% against what he calculates as $154 billion of relevant profits over 10 years. This would total roughly $19 billion against the iPhone maker. Hall even went as far as saying the following regarding the matter:

    We see even this as largely irrelevant for Apple's share price given the company's large cash pile.
    Hall mentioned the impact could be greater as he estimated that roughly 59% or $42 billion of Apple’s earnings before taxes run through the Irish tax structure with almost no taxes imposed on them. If the European Commission were to go through with the worst-case 12.5% rate on those dollars, Apple’s annual earnings could drop by just under 10%.

    On its behalf, Apple issued a warning to investors last month noting that the European Commission’s scrutiny of Ireland’s tax laws could have a “material” impact on Apple’s bottom line.

    We’ll have to wait and see what happens.

    Source: JP Morgan Chase via AppleInsider
    This article was originally published in forum thread: Apple's Annual Earnings Could Be Reduced by 10% with Changes to Irish Tax Laws started by Akshay Masand View original post
    Comments 2 Comments
    1. rickuk's Avatar
      rickuk -
      Apple like other multinational companies should pay the tax rate of the European country that they operate in instead of trying to feed all their revenue through a low tax country
    1. Brandon.amos's Avatar
      Brandon.amos -
      They wouldn't be losing out on so much profit if they would lower the cost of their products. When it only costs about $89 to make an iPhone, and they sell it for $400, that is some steep profit margin.