Apple’s Tim Cook calls overseas tax rap ‘political crap’

23 Dec 2015 | Author: | No comments yet »

Apple’s Tim Cook fills key role he once played for Steve Jobs.

Cook’s remarks, made on CBS’ 60 Minutes show, come amid a debate in the United States over corporations avoiding taxes through techniques such as so-called inversion deals, where a company redomiciles its tax base to another country. Cook on Thursday announced that Jeff Williams will be promoted to the position of chief operations officer, a job that has been vacant since Cook became Apple’s CEO in 2011.The tech giant has been subject to European Union tax probes on low-tax arrangements — or “sweetheart deals” as they’re known — in Europe, and has continued to invest in creating jobs in Ireland.Tim Cook doesn’t often lose his cool, but he got surprisingly riled up while discussing claims that Apple is doing its best to avoid paying taxes on overseas earnings during an interview with 60 Minutes’ Charlie Rose. “That is total political crap,” Cook says. “There’s no truth behind it. The appointment was part of several management changes at the world’s most valuable company, including the elevation of a top engineer who has been in charge of designing chips that are at the heart of the iPhone and iPad.

The company holds $181.1 billion in offshore profits, more than any other U.S. company, and would owe an estimated $59.2 billion in taxes if it tried to bring the money back to the U.S., a recent study based on SEC filings showed. Rebecca Lester, assistant professor of accounting at the Stanford Graduate School of Business, thought Cook’s colorful language might reflect frustration about the lack of movement on tax reform in Washington. “Companies and the government are in a game of chicken, waiting to see which one moves first,” she said. Carl Levin, D-Mich., in 2013 accused Apple of shifting “billions of dollars in profits offshore” that should be subject to U.S. taxes. “This is a tax code, Charlie, that was made for the industrial age, not the digital age,” Cook said. “It’s backwards. Williams also vets potential acquisitions, coordinates with Foxconn Technology Group and other manufacturers, and oversees the logistics needed to get millions of devices from Asian factories to stores around the world. It’s past time to get it done.” When speaking at the 2013 Senate hearing, Cook said that the US tax rate from transferring overseas earnings “would need to be a single-digit number” before Apple brought its money back.

Williams has been called “Tim Cook’s Tim Cook.” As part of the management shuffle, Johny Srouji was promoted to senior vice president for hardware technologies, and Phil Schiller, senior vice president of worldwide marketing, will take on leadership of the App Store, the company said in a statement. Senators had questioned whether these were “functionally managed and controlled in the US,” and, if so, whether Apple ought to be paying US taxes on them. The debate has quieted down in the time since, and Ireland — where one of its major holding companies was based — is beginning to close a major tax loophole that companies used to minimize payments. Apple’s polished public persona tends to make its media appearances tame and constructed, but this clip suggests that Rose may get some unexpected moments out of them.

Apple has been investing heavily in semiconductors and unlike many other handset makers, it designs its own chips instead of buying whatever the latest product is from outside suppliers. Apple declined to comment on succession, but has said in the past that it has a plan in place and that different members of its executive team could step in. “These strategic moves fit like a glove as Apple needed to fill the COO vacancy heading into a pivotal 2016,” said Daniel Ives, managing director at FBR Capital Markets. “They really need to boost that bench behind Cook.” The appointments come at a critical time for Apple.

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