Like the U.S. Senate, SEC Looked at Apple’s Tax Practices
Several recently filed documents from the U.S. Securities and Exchange Commission reveals that the regulatory agency sent a series of letters to Apple (NASDAQ:AAPL) over questions about how the Cupertino-based company described its overseas tax agreements in its 10-K filing for fiscal year 2012, reports the Los Angeles Times. The letters were sent soon after Tim Cook made an appearance in front of a U.S. Senate hearing in May of this year in order to answer questions about Apple’s overseas tax practices.
Although the Senate hearing revealed that Apple avoided income taxes on $74 billion in profit made between 2009 and 2012 by using multiple subsidiaries based in low-tax countries such as Ireland, it was determined that Apple had broken no tax laws. However, the SEC sent a letter to Apple that requested more information about the “specific risks associated with your current tax structure.” The SEC also wanted “the names and tax rates” of the countries where Apple kept its “undistributed foreign earnings.”
In response, Apple wrote that, “substantially, all of the Company’s $40.4 billion in undistributed international earnings intended to be indefinitely reinvested in operations outside the U.S. (as of September 29, 2012) was generated by subsidiaries organized in Ireland, which has a statutory tax rate of 12.5 percent. The Company supplementally advises the Staff that most countries in which the Company operates have tax rates lower than that of the U.S.” The U.S. currently has a 35 percent corporate tax rate.