Apple's tax strategy
The company is using a controversial strategy to avoid paying billions of dollars in taxes to the government, thereby increasing its profits.
Yes, my friends. Strategies to pay less taxes aren't unique to Brazil. Looking at the entire 2011 fiscal year, Apple paid US$3,3 billion in taxes, which reflects less than 10% of the US$34,2 billion the company earned.
In just the first three months of last year, the Cupertino company, to give you an idea, had a profit of US$5,99 billion. This represents a staggering 95% increase compared to the same period in 2010, which saw US$3,07 billion. Looking at the numbers objectively – and without including Mac and iPad sales – the amount was primarily driven by Apple's mobile phone – the iPhone, which sold approximately 18 million units, a huge growth of 113% compared to the same period of the previous year. Revenue between January and March jumped 83% compared to the same period in 2010.
Still analyzing them, Apple presented new growth this month – April 2012 – and broke a new record, with a 94% increase in profit compared to the same period in 2011. Profit was US$11,6 billion, compared to US$5,99 billion the previous year. Truly overwhelming.
Given its immense growth and profits, Apple demonstrates a highly strategic approach to managing its offices and branches. The company employs a controversial, yet uncontroversial, strategy to avoid paying billions of dollars in taxes to the government, thereby increasing its profits.
The American newspaper The New York Times shows in a report that the company establishes offices in cities and countries with low tax rates and therefore manages to increase its profits. The report cites the company's headquarters in Reno (Nevada, USA), where the corporate tax is zero, while in Silicon Valley the tax rate is 8,84%. What a difference!
It also mentions that countries like Ireland and Wales have subsidiaries of the company in places that follow the same tax policy for the corporate environment. This would be more or less what we know as tax incentives, attracting large firms to have offices in their territory.
The report also mentioned that this practice is carried out by various companies, but it is much more common for technology companies, as they primarily profit from their patents and software development, not from physical assets, and therefore can relocate their offices more easily.
Lucas Fontenele (@lucasfontenele) is a lawyer passionate about technology.