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Apple executives are expected to testify on Capitol Hill today to defend the iPhone maker’s offshore profits, but Cupertino has attempted to head off any surprises by posting Cook’s responses for all to see.
Politico reported Monday that U.S. Senate investigators plan to grill Apple CEO Tim Cook, CFO Peter Oppenheimer and Head of Tax Operations Phillip A. Bullock on Capitol Hill today over claims that the tech giant has used “numerous U.S. tax loopholes” to avoid upwards of $44 billion in taxable income from 2009 through last year.
The problem for the Permanent Subcommittee on Investigations is that Apple’s foreign-earned income is funneled through a corporation in Ireland, where the company has long enjoyed lower tax rates. But even the Senate has stopped short of painting Apple’s so-called “tax gimmicks” as illegal.
“What we intend to do is to highlight that gimmick and other Apple offshore avoidance tactics so that American working families, who pay their share of taxes, understand how offshore tax loopholes raise their tax burden and how those loopholes add to the federal deficit,” explained Sen. Carl Levin (D-Mich.), the chairman of the subcommittee.
To head things off at the pass, Apple published an 18-page document on Monday (PDF link) which lays out its full testimony in advance, as well as detail the company’s history and full details of how much it pays in taxes — including sales and use tax payments from its retail operations, state income tax and employer payroll taxes.
“Apple wants to make clear to the Subcommittee that the Company does not use its Irish subsidiaries or any other entities to engage in the following tax practices that were the focus of the Subcommittee’s September 20, 2012 hearing, entitled Offshore Profit Shifting and the US Tax Code,” the document reads.
“Specifically, Apple does not move its intellectual property into offshore tax havens and use it to sell products back into the US to avoid US tax, nor does it use revolving loans from CFCs to fund its domestic operations. Apple does not hold money on a Caribbean island, does not have a bank account in the Cayman Islands, and does not move any taxable revenue from sales to US customers to other jurisdictions in order to avoid US taxation.”
The hearing, entitled “Offshore Profit Shifting and the U.S. Tax Code – Part 2 (Apple Inc.),” kicks off at 9:30am EST on Tuesday in Room 106 of the Dirksen Senate Office Building.
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