Tim Cook Calls Apple’s Tax Avoidance Accusations ‘Total Political Crap’

23 Dec 2015 | Author: | No comments yet »

60 Minutes is going inside Apple’s ‘secret’ design lab on Sunday.

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 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.Coming up this weekend on “60 Minutes,” (AAPL) talks with on a number of topics, including repatriation of overseas profits and the issue of taxes.Apple chief executive Tim Cook has dismissed criticism of the company’s overseas tax policy as “political crap” from lawmakers who won’t fix an outdated US tax system. Apple pays every tax dollar we owe.” Rose was pressing Cook on why Apple leaves billions of dollars overseas, more “probably than any other American company,” Rose notes.

Rose will visit Jony Ive’s “secret” design studio, and will take a tour of the “Apple’s store of the future,” guided by Apple retail head Angela Ahrendts. Cook was questioned on this matter two years ago in front of Congress, and he repeats a lot of the points that he made back then: namely, that he thinks it costs too much to bring money back to the US. “It would cost me 40 percent to bring it home, and I don’t think that’s a reasonable thing to do,” Cook says. “This is a tax code, Charlie, that was made for the industrial age, not the digital age.

While the show isn’t likely to reveal a mockup for the next iPhone, it should give a rare insight into the studio in which Apple veteran Ive designs Apple’s products — at a time when Apple’s most recent designs have come in for criticism. Nomura Equity Research’s Jeffrey Kvaal reiterates a Buy rating on the shares, and a $145 price target, writing that Williams “has functioned in this role for some time – he and Mr. 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. He admitted that Apple retains overseas income in its foreign companies to avoid incurring American corporate taxes, the highest in the developed world. 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. Reform of the complex tax code has become an election issue with candidates condemning US companies that merge with overseas competitors in low-tax countries to avoid American taxes in a practice known as corporate inversions.

The appointment of Johny Srouji as head of hardware “results from his success in silicon efforts, perhaps reflecting further vertical integration intentions as well as the Apple’s predilection for unusual spellings of ‘Johnny,’” quips Milunovich. Apple has an interesting dichotomy: its products are increasingly closed and integrated while at the same time driven by platform economics, which require Apple to be more open. However, we think Apple mostly subsidizes on the software/services side of the platform to monetize through the iPhone, which limits the profitability of services.

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