Apple CEO Tim Cook has been a vocal Trump hater, but a certain policy announcement by Trump at the Economic Club of New York in September may give some peace of mind to Tim Cook.
Trump had said in support of allowing companies to repatriate their overseas profits to the US at a reduced tax rate. The current tax slab for repatriated profit remains at a whopping 35 per cent, but Trump said he will bring it down to as low as 10 per cent to allow American companies that operate on a global scale to bring back their profits from overseas tax havens to the United States.
And this is something Tim Cook agrees with. In 2013, Cook said, “If you look at it today, to repatriate cash to the U.S., you need to pay 35 percent of that cash. And that is a very high number,” Cook said in an interview Thursday. “We are not proposing that it be zero. I know many of our peers believe that. But I don’t view that. But I think it has to be reasonable.”
And this will be welcomed by not just Apple. Over 72 per cent of Fortune 500 companies stack their profits that goes over $2.1 trillion in overseas tax havens like Ireland, Singapore and Luxembourg. Apple tops the list by parking $181.1 billion while Google and Microsoft has overseas profit of $108.3 billion and $47.4 billion respectively.
And with the current tax rate of 35 per cent, if Apple were to bring back their profits, it would owe $59.2 billion in taxes to the United States. President-elect Donald Trump proposes to bring the rate down to 10 per cent to reduce this tax burden of repatriated profits.
In September, the European Union slapped a $14.5 billion fine on Apple for allegedly evading taxes and parking their off-shore revenues in Ireland in a process known as the ‘Irish double’. Apple was accused of paying no more than 1 per cent tax in Ireland where the income tax rate itself is a measly 2.3 per cent of your profits.