Apple Reduces Tax Burden by Using New Office Locations

Apple Inc. uses offices in states other than California -where it’s headquartered- and countries outside the U.S. to help minimize its overall tax burden

The company has an office in Reno, Nevada, to collect and invest its profits and avoid paying California’s 8.84 percent corporate tax rate on some of its gains, as Nevada’s tax rate is zero.

The method, which is legal, is one of many that enable the iPad and iPhone maker to reduce its tax bill by billions of dollars each year.

Former Treasury Department economist Martin Sullivan estimates Apple paid cash taxes of $3.3 billion worldwide on posted profit of $34.2 billion last year, and would have paid $2.4 billion more in U.S. taxes without the arrangement it has.

Technology companies, due to a tax code skewed to an industrial age and not a digital one, are among the least-taxed businesses in the U.S.as government and corporate data stated

In October 2010 that Google Inc. cut its taxes by $3.1 billion in the three years prior using strategies known as the “Double Irish” and “Dutch Sandwich,” reducing its tax rate internationally to 2.4 percent.

Apple said it “pays an enormous amount of taxes, which help our local, state and federal governments.” The company said its U.S. operations generated about $5 billion in federal and state income taxes in the first half of fiscal 2012, as the New York Times reported.

The company also has subsidiaries in Luxembourg, Ireland and the British Virgin Islands that allow it to pay lower taxes on royalties or processed transactions, as former Apple executives said.

Apple declined to comment on its operations in Nevada or the other countries.