The Senate Permanent Subcommittee on Investigations claimed Apple has cash reserves of $145 billion (£95bn), of which $102 billion is located in offshore accounts to avoid paying billions of dollars in taxes in the US. There is no suggestion that Apple is doing anything illegal.
Apple denied the accusations in a pre-prepared testimony ahead of Tim Cook’s meeting with the panel later today, claiming the reason it has so much money outside the US is because it sells the majority of its products outside the US.
Apple recently generated £10.9 billion through a bond sale as part of plans to return some if its cash reserves to shareholders, rather than pay the tax it would incur if it moved some of the money back to the US.
The company has called for an overhaul of the US corporate tax system to make it simpler and include a reasonable tax on foreign earnings that allows the free movement of cash back to the US. It said this will create jobs, stimulate investment and promote economic growth.
The iPhone manufacturer acknowledged that such changes might increase its tax bill, but this would be acceptable if the system was more efficient. Five out of the ten US companies with the largest off-shore cash balances are technology firms, and the Senate Committee has already questioned HP and Microsoft.
In the UK, a number of tech firms, including Google, Amazon and Facebook, have come under fire for their tax arrangements. Earlier this week, a former Google employee said he had assembled an extensive collection of documents that proved the company had not engaged in tax-dodging schemes that minimised its UK tax bill to £6 million.
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