Thursday, June 16, 2016

How Apple avoids paying tax in the US - Paul Gillis

Paul Gillis
Paul Gillis
Companies have a range of legitimate ways to avoid paying tax in the US. Apple is using one of them by not setting up a venture arm for its overseas investment, but by directly reinvesting its revenue from overseas, for example its hefty investments in car-hailing service Didi, says Beida accounting professor Paul Gillis to Marketplace.

Marketplace:
But Apple does face one possible disadvantage with its investments. Most of Apple’s cash is overseas, which means Apple would face a large tax burden if it tries to bring it back to the U.S. 
On one hand, Apple has already found a use for this capital with its investment in Didi. Paul Gillis, a professor at Peking University’s Guanghua School of Management, said Apple will likely use profit from Chinese sales held in its corporate subsidiaries in China for the Didi investment. Investing the capital, instead of trying to bring it back to the U.S., avoids a 5% to 10% tax China charges for removing proceeds from the country as well as U.S. repatriation taxes 
“Using it to buy an interest in Didi is a legitimate way to use those funds without any tax consequences because those funds remain in China and remain Chinese assets,” Gillis said. “That wouldn’t be evading taxes doing that. They’re just making a decision not to take the money back to the U.S. and doing something else.”
More in Marketplace.

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