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Apple’s Move Keeps Profit Out of Reach of Taxes [USA]

Author: [column] Floyd Norris, New York Times, Published on: 2 May 2013

Some companies actually pay something close to the nominal 35 percent United States corporate income tax rate...But companies with a lot of intellectual property — notably technology and pharmaceutical companies — get away with paying a fraction of that amount, if they pay any taxes at all...Transfer pricing is an issue in all multinational companies and can be used to move profits from one country to another...[T]here are two ways the United States could get out of the current mess. The first...is to end the deferral...Companies would owe taxes on profits when they made them...President Obama...has suggested immediate taxation of foreign profits earned in tax havens...The other way is to move to what is called a territorial system, one in which countries tax only profits earned in those countries...Apple and similar companies might find that their success in avoiding taxes was making them unpopular with other taxpayers — people whom Apple wants to be its customers. [Also refers to Parmalat, Starbucks]

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Related companies: Apple Parmalat Starbucks