We all know that Apple is the world’s most successful and profitable technology company based in Reno, Nevada. However, the company doesn’t design their iPhone there, neither does the company run their AppleCare Customer service from the city, nor does this technology giant manufacture their MacBooks, iPads, iAnything anywhere near there.
However, with only a handful of employees working at the Reno location, the techno giant has managed to pull off something crucial to the company’s operations. Apple has managed to avoid paying several millions of dollars in taxes in California, as well as 20 other states.
Apple’s headquarters are nested in Cupertino, California, and by placing an office merely 200 miles away in Reno, the side office is charged with collecting and investing the company’s profits. Going about it this way allows Apple to sidestep the state’s income taxes on some of their profits.
While California’s corporate taxation rate is 8.84%, Reno has a taxation rate of 0.0%. All over the world, Apple has established subsidiaries in locations that offer low or zero taxation rates. Locations included in the list are Ireland, the Netherlands, Luxembourg, and the British Virgin Islands.
Naturally, all corporations do their best at minimizing their taxes. It’s human nature. However, for our friends at Apple the savings ratio on their taxes are alarming given their extremely high profit yields. According to Wall Street analysts, Apple is capable of yielding $45.6 billion in the current fiscal year. If they accomplish this, it’ll set a new record for any American-based business.
Apple is serving as a mentor on how large technology companies can take advantage of tax codes. Some profits for large companies – including Apple, Google, Amazon, HP, and Microsoft – have derived their profits not from that of physical goods, but from royalties coming in from their intellectual property. Such property includes patents on programs that makes different devices operate.
Even when comparing against other tech companies, Apple’s taxation rates are ridiculously low. Yes, Apple has remade several industries, helped ignite economic growth, and has enlightened their customers. But they’ve also created corporate strategies in which clearly take advantage of the taxation loopholes. Using a special type of accounting technique, also known as the “Double Irish With a Dutch Sandwich,” the company avoids high taxes by routing their profits through their Irish subsidiaries and then via the Netherlands before finally paying their ‘taxes’ when the money hits the Caribbean. And now, in today’s world, that very same tactic is used by several large corporations.
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