Stuck overseas in the sense that corporations aren't willing to pay American taxes...
Why should Apple pay American taxes on the profits from a product manufactured in China and sold in Germany? (Albeit "Designed in California"!)
Why should Apple pay American taxes on the profits from a product manufactured in China and sold in Germany? (Albeit "Designed in California"!)
Two basic scenarios:
1. US entity owns a company in the UK. UK company earns $100, pays 20% tax on that, and is left with $80. Declares a dividend to the US parent, and the US then taxes the difference (35% US tax rate - 20% UK tax rate = another 15% to pay). We're left with $65
2. UK entity owns a company in Sweden. Swedish company earns $100, pays 22% tax on that, and is left with $78. Declares a dividend to the UK parent, which is then left untaxed.
Why does 2 make more sense than 1? Because the money was generated in Sweden, and the fact that some parent/holding entity is UK based does not matter (like, at all).
Scenario 1 pushes US companies to expand abroad (i.e. through foreign M&A), and not repatriate any profits back to the US. It also makes it easier for non US entities to acquire US companies, because they can achieve larger tax synergies than a domestic US acquirer would.
A US company trying to achieve something like that would have to do an inversion, which sometimes can be hard to do.
The current state of the US tax code is a great example why Microsoft paid a whopping $2bn for something like Minecraft (Sweden based), or an even larger amount for Luxembourg based Skype. What can they do with that cash otherwise? It's not like they're going to repatriate (ever) without a tax holiday.
By the time companies come out of the US, they're typically already well on their way competitively and have scale.
It's the same reason China is so effective at producing giants like Alibaba, Xiaomi, and Baidu.
On the other hand, the scenario of a UK company owning a company in a tax-free zone in dubai and thus paying 0% taxes anywhere doesn't sound fair either.
Repatriation of those funds would essentially mean paying close to 35% tax (+ state taxes). DTTs don't fix that, they just make sure you don't pay the same amount twice. I.e. the 20% in the UK AND 35% in the US.
Add to that fact that Apple can pretty much borrow unlimited funds in the market (debt != income, you don't pay tax when you borrow) to fund share buybacks and dividends. Why repatriate? Financially it just does not make sense, since you'd lose so much of your equity. It's better to invest it abroad.
Re Dubai: If an entity is a conduit company, then maybe not. But if you're operating a business or selling stuff there, then I think it is. No income tax is more of an anomaly these days, and a way for countries to attract new business.
* Apple, Google, Microsoft et al. have many foreign workers (green card, H-2B, or maybe L1 visa) and it is easier for american citizens to move/work outside of US than foreigners to get work visa in US. So the question is, if a country (like Spain or Greece) promises tax advantage for next 25 years and makes easier to get visa for employees, would these companies move their hq there?
* If, say, European Union provides better shield, would Apple move its HQ to Germany or Spain?
* Infrastructure: I can say most European counties have better infrastructure than US and it looks like most us companies build their own if needed. With $500 billion on hand, what would prevent these companies to build a better infrastructure in a host country.
>If, say, European Union provides better shield, would Apple move its HQ to Germany or Spain?
Two words. Labor laws.
http://www.businessinsider.com/ceo-employee-lawsuits-killed-...
Although, while I'm not an expert on France's labor laws, I agree laws in most EU countries are on the side of employees. But that doesn't mean when you hired someone, he/she will be working at the company for rest of his/her life without doing some work. Maybe someone who's expert on labor laws can clarify.
Edit: Also different countries in the EU has different laws. It might be difficult to `get rid of bad employee` but it might be easier in Spain...
As someone who lives and works in the EU, none of the conditions seems to be particularly unreasonable. If you're talking about someone who isn't working, presumably you'd be firing them for cause. Which you can do: you need to follow a process and document that you're following it, you need to give them explicit warning that their performance is not up to par and give them the opportunity to fix it, and you need to do all of this within a reasonable timeframe.
The Mandriva guy was explicitly not doing that; if you're making people redundant then you're declaring that there was no problem with them specifically, the company just needs to eliminate those positions. If you then rehire people for those positions within the next few months, the courts tend to take a rather dim view of that.
It'd do a lot to reduce global warming by humans.
It makes even less sense.
I'm not going to put down your imagination but it didn't take me long to think of a worse use.
Anything that returns more money than treasury bills at the same maturity date is de facto not "safe."
http://www.engadget.com/2014/05/22/charting-apples-growing-s...
Now it's one thing to say it's justified because Apple would have to go out of business and lay off thousands of of their 100k employees. But we can all take a look at that financial situation and make our own moral judgement on whether they should have effective tax rates much lower than a regular business.
IMO, it is non-obvious that they are obligated to do so.
If the other family members decided it was a bad idea to send you money to your country because it will be taxed to death, can you blame them?
Why should I? Of course this is not actually what they are, or at least what they claim to be. That is, since money is fungible in a global economy they can in effect use untaxed funds to influence U.S. political campaigns while they claim they are a single person deserving of the same rights afforded by the constitution.
U.S. persons cannot do that. This is what I mean by the double standard.
Right, but of course being as many of the companies in question here were founded in the U.S. and made use of U.S. infrastructure to build their business, and are headquartered in the U.S., and rely on the U.S. labor force for a large part of their enterprise, it isn't accurate to call them non-american.
But what Apple does is enjoy all of that in the US to which it contributes sub-standard taxes, manufactures in China, sells in Germany, but pays Ireland a large portion of its taxes, which in Ireland are diminished to a small amount. That's quite silly.
Sure if Apple created an EU HQ and did a large amount of design, manufacturing, sales, engineering etc, then it's fine if pays taxes there. But it does all its engineering and design (the bulk of the company) in the US, but pays little taxes there.