Share:

Apple Saves $9.2 Billion In Taxes By Financing $55 Billion Stock Buyback With Debt

Share:

According to an estimate by Moody’s Investment Services, Apple has been able to avoid as much as $9.2 billion in taxes by financing part of a $55 billion stock buyback with debt rather than offshore cash that would have been billed by the U.S. government, Bloomberg is reporting. Apple will however be paying an interest of about $308 million a year on the $17 billion bond offering according to Gerald Granovsky, a senior vice president at Moody’s.

IAPC6X3UCD94

Granovsky noted that if the funds had come from Apple’s offshore $100 billion cash pile, Apple would have had to pay a 35% tax to repatriate the money, which means Apple has avoided around $9.2 billion in taxes. Also, since interest payments are tax-deductible, it would be another $100 million a year. Apple spokesman Steve Dowling said Apple has paid $6 billion in income taxes in 2012, which is 1 out of every 40 dollars in corporate income taxes collected by the U.S. government.

Watch the Latest Apple Technology News Below

The company said last week that it would return an additional $55 billion in cash to shareholders through share repurchases and increased dividends, to compensate for a stock that’s been hammered by signs of slowing growth. In total Apple will have returned $100 billion, including past buybacks and dividends, through 2015.

The Financial Times earlier reported that Apple will avoid a potential tax bill of as much as $9 billion using the proceeds from the bond sale.

Earlier this week, Apple’s sale of bonds was reported as the biggest corporate offering on record.

Share: