Apple has announced that it intends to contribute US$350 billion to the US economy and generate 20,000 jobs in the United States over the next five years, detailing its plans in its first response to the new tax legislation passed last year .
President Donald Trump welcomed Apple’s decision with a tweet stating it is a “huge win for American workers and the USA!”
Apple which is today the world’s most valuable company has also reportedly told employees that they will receive stock-based bonuses worth US$2,500 each after the new US tax law, according to sources.
New Tax Rules For International Income
The new tax law which came into effect late last year has scrapped the earlier international tax system for corporations under which companies could defer U.S. income taxes on foreign earnings until the earnings was returned to the US. This rule led to most companies stockpiling nearly US$3.1 trillion offshore which drew criticism from several quarters.
Apple has confirmed that as mandated by the new tax law, it will be paying US$38 billion in taxes on its overseas income. According to experts, this tax payment is the largest to be announced so far under the new rules.
Edward Kleinbard, a law professor at the University of Southern California noted that while “this is a record payment”, it also showed how successful the company has been “at gaming the system” worldwide.
Considering that the new corporate tax rate is set at 15.5 per cent, the amount of its tax payment indicates that Apple is returning around US$245 billion in cash to the United States.
As per its last earnings report, the company had declared that it was holding US$252 billion in cash overseas.
Apple Has Faced Censure For Its Tax Avoidance
Apple has been facing scrutiny and criticism for its tax policies around the world. It recently agreed to pay over US$100 million in taxes to British authorities after an audit.
The company has also lobbied previously for the US to slash tax rates on foreign profits brought back to the US, stating that such changes would ensure more investment in the US economy.
Announcing the company’s plans, Apple chief executive Tim Cook said in a statement that the company is focusing on investments in areas where it can have “a direct impact on job creation and job preparedness,” He also added that Apple had “a deep sense of responsibility to give back to our country and the people who help make our success possible.”
Jobs To Be Created Across United States
In addition to the investment, Apple has said that will be adding further to the 84,000 employees it currently has in the US.
The new jobs are likely to come from fresh hiring at Apple’s current locations as well as from new campus-focused hiring for technical support. The company will announce further details later this year.
It also plans on building new data centres in the US spending around US$10 billion on it, as part of the US$30 billion investment being proposed for capital expenditure.
Apple has been facing criticism from US lawmakers for failing to make more of its various products including the iPhone and the iPad in the United States. A majority its products are produced and assembled in China but company has in recent years ramped up production facilities in the U.S.
The company will also be increasing the size of a manufacturing fund announced earlier to provide support for its network of suppliers who provide parts for its devices. That fund which is already operational in Kentucky and Texas is expected to go from US$1 billion to US$5 billion.
