US tech giant Apple has taken advantage of President Trump’s tax reforms by onshoring profits and increased dividend payments by 16% in its latest quarterly figures ending 31 March
Apple has posted quarterly revenue of $61.6bn (£45.1bn), an 16% year on year increase, with international sales accounting for 65% of revenue.
Trump’s repatriation tax was introduced through the Tax Cuts & Jobs Act 2017 and is effective from 1 January 2018. The new tax requires US companies to pay a one-off 15.5% tax on their offshore income, a tax break which was last offered in 2005.
In June 2017, before the tax was introduced, Tim Cook, Apple’s CEO, called for the repatriation tax to be made mandatory for all US companies and called for the proceeds of the tax to be spent on upgrading the US infrastructure to create jobs.
Donald Doran, national professional services partner at PwC US said: ‘
The financial statement impact of recording the toll tax liability may be significant and will vary depending on a number of factors, including previous assertions. Historically, many companies have not recorded (or disclosed) a liability for their outside basis differences. In other cases, liabilities may have been recorded or disclosed, but enactment of the reform provisions may drastically change that amount.
‘Measurement of the toll tax liability may require extensive effort. Earnings and profits are determined on a cumulative basis and historical practices in calculating and tracking both earnings and profits and tax pools should be revisited.’
In January, Apple was the first tech company to announce plans to bring back overseas revenue and anticipated making a one-off $38bn tax payment.
Luca Maestri, CFO at Apple, said: ‘Our business performed extremely well during the March quarter, as we grew earnings per share by 30 percent and generated over $15 billion in operating cash flow
‘With the greater flexibility we now have from access to our global cash, we can more efficiently invest in our US operations and work toward a more optimal capital structure. Given our confidence in Apple’s future, we are very happy to announce that our Board has approved a new $100bn share repurchase authorization and a 16% increase in our quarterly dividend.’
Report by Amy Austin
