Do you know that every single second, Apple generates $1444 in profit, which is more than any of its competitors, including companies such as Alphabet, Microsoft, and Facebook combined? Whereas, such as the huge amount of countable $285 billion in revenue, makes it more like a country than a company. Not to mention, anyone would kill for pockets so deep.
Therefore, Apple is wary even after considering that most companies beg not to pay a tax and instead countries beg not to tax Apple. Today we are going to share a strange story about Apple’s finances that explains how Apple got so wealthy, where the problem is, and what they are going to buy next.
Apple Money Problem?
Every company pays taxes to the country in which their money is generated, such as when a CPU is made and manufactured in Nepal. Still, if it’s sold in India, that’s where it pays taxes, and because these taxes depend on and vary by country, so do the costs of products. The best example is the iPhone X, which is $1000 in America, $1368 in India, and $1455 in Hungary. Most likely, if it were not for import taxes, it would be cheaper to fly to the United States (US), buy an iPhone, and come back home.
Apple pays taxes where profits are made.
There is an exception to every rule, and the exception is always in America, which is the only country that taxes based on citizenship, which means a US citizen working and living abroad still owes taxes back to the United States (US). As they say, “Once an American, always an American!”
Furthermore, you could renounce your citizenship, but you’d be taxed for that too, and American companies, including Apple, pay the highest tax in the world on profits made anywhere across the globe. This means if you change your country, it doesn’t mean you don’t have to pay taxes back to America.
A hidden apple fortune!
At this point, when Apple pays tax overseas, America itself subtracts the amount from its tax rate. Here, every American tech giant like Apple, Google, Facebook, and other major companies rethink and take another profitable step. Whereas, they keep their money out of America now by creating their subsidiary, which is legally different, but the only difference is that all “Apple Foreign Bank Company” accounts are located in countries like Ireland and Jersey, which have very generous tax codes.
Ireland’s economy is not run by a tax shelter, but because of a code like this, they might lose in taxes but get jobs in return through companies like Apple. So, wherever the European Union asks for dues and says it is not a fair deal, they are passing up on 5% of their entire GDP (gross domestic product). You got it right, but you might be stuck thinking about the other 30% of revenue Apple generates in the United States (US).
Here comes an interesting fact: if you want to pay fewer taxes, then you have to make less money, at least on paper. In contrast, all Apple products depend on patents; unlike places, people, or things, patents have no precise value.
This means Apple has found a handy way to move money. Then, Apple gives its patents to the Irish subsidiary, which then rents them back to Apple for a fee. So, when Apple made money for us, technically they didn’t make any profit because it was owned by Ireland. This is how Apple makes a profit by escaping its country, whether it’s made in Spain or Mexico, and technically, Ireland taxes that money. This escape system, or loophole, makes it nearly tax-free.
Apple Money Problem?
All of this is 100% legal and 100% common, but Apple makes so much more money that, in its unusual position, all the money is frozen and works like the world’s largest bank. In this scenario, such as paying American bills, Apple takes American loans. They can’t keep up with the rate at which it is growing. On the other hand, there is no singular apple; the CEOs are shareholders, and when someone buys a portion of the apple, he does so in the hope of earning more money tomorrow than he paid initially.
For general people, money in a bank account is the money it can use, but to a shareholder, all the money means nothing if it was watching the grass grow. When the US lowers its corporate tax, Apple is going to bring back its money, and it will boost revenue through spending on research for future products, acquiring small companies, and buying back shares.
Why won’t it buy Tech-Giant?
There were a lot of articles suggesting Apple should buy tech giants like Tesla, Activision, and Netflix. These all make sense for the investigators because Apple currently depends on one single product, the iPhone, as they start adding services and hardware to their catalog, but these arguments are another. If Microsoft and Google acquire and vice versa, then Apple rarely stays in bed.
Apple isn’t bad at money?
According to reports, Microsoft bought LinkedIn for $26 billion, and Apple bought Beats for $3 billion, which is 8x more than Apple. Apple only buys talents and technologies and never tries to make quick money. They have a strategy: when Apple needs Touch ID, it buys Authentic; when it needs voice assistance, it buys Siri; and when it needs Steve Jobs, it buys NeXT.
If Apple buys Activision, Tesla, or Netflix, it suggests that Apple stops being Apple. We would like to know your thoughts on the same. Thanks for being with us. We would like to know your valuable opinion and feedback. If there is any query, share it with us in the comment section below.