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How Apple Avoids Paying Billions in Taxes

By Kenny Yeo - on 30 Apr 2012, 10:25am

How Apple Avoids Paying Billions in Taxes

Source: TechnoBuffalo

For Apple, whose profits are in the billions, avoiding that one or even half a percentage point of tax could mean hundreds of millions of dollars. And one way the tech giant cuts down on its taxes is to run a small office in Reno, Nevada. Braeburn Capital in Reno, Nevada, is an Apple subsidiary that manages and invests the company's billions and one reason Apple chose to locate the office in Reno is because corporate tax rate in Nevada is 0%.

This is just one of the many ways Apple legally uses to help reduce its worldwide tax bill by billions of dollars. Taxes is a tricky matter as can be seen in this excerpt from the article:

In one of his last public appearances before his death, Steven P. Jobs, Apple’s chief executive, addressed Cupertino’s City Council last June, seeking approval to build a new headquarters.

Most of the Council was effusive in its praise of the proposal. But one councilwoman, Kris Wang, had questions.

How will residents benefit? she asked. Perhaps Apple could provide free wireless Internet to Cupertino, she suggested, something Google had done in neighboring Mountain View.

“See, I’m a simpleton; I’ve always had this view that we pay taxes, and the city should do those things,” Mr. Jobs replied, according to a video of the meeting. “That’s why we pay taxes. Now, if we can get out of paying taxes, I’ll be glad to put up Wi-Fi.”

He suggested that, if the City Council were unhappy, perhaps Apple could move. The company is Cupertino’s largest taxpayer, with more than $8 million in property taxes assessed by local officials last year.

Ms. Wang dropped her suggestion.

While one might argue that avoiding taxes is wrong, but the fact is that what Apple is doing is not illegal. Furthermore, the company has contributed in other ways such as donating more than $50 million to Stanford University over the past two years. They have also recently donated $50 million to an African Aid movement.

An interesting read if you can afford the time, for the article is pretty long.

Source: NY Times