A weekend story from the New York Times shared a surprising statistic: Apple paid just $3.3 billion on $34.2 billion of profits last year — giving it a tax rate of just 9.8 percent.
The report, which points out that nearly every major technology firm has its share of tax tricks up its sleeve, says Apple accomplishes this feat with a two-pronged tax strategy. For domestic sales, the company pays profits as a royalty on a subsidy it owns in Ireland, which are then routed to a tax haven. For overseas sales, the company uses a second Irish subsidy, routes the profits through The Netherlands to avoid European taxes, and then sends its profits to its tax haven via the first Irish subsidy. (This strategy is called the “Double Irish with a Dutch Sandwich,” the report says.)
Tech firms, the report says, pay about one-third less in taxes than do other companies on the Standard & Poor’s 500.