Recent Posts

Accounting for Physicians Webinar Follow-up

May 26, 2020

Dear CSS Members and Colleagues:

 

As a follow-up to the above webinar, Dr. Goel posed the question, “How does Apple pay only 17% tax on annual earnings.” Lauren answered the following:

 

This article may help answer the question Danny asked about Apple:

 

https://www.nbcnews.com/business/taxes/twice-many-companies-paying-zero-taxes-under-trump-tax-plan-n993046

 

What Apple has done is taken tax paid/profit and this equals about 17% which is not the 21% US tax rate (corporate tax rate)— this is because the 21% tax rate is applied not just to the profit we see on the income statement, but also to the profit figure adjusted for various deductible expenses, credits, etc

 

Without getting too complicated here, a company can adjust their profit for tax deductible expenses (for example, I think charitable contributions are one of them, professional subscriptions are as well I believe) before applying the tax rate to determine tax owed

 

This is how you can end up with tax paid as per income statement / profit as per income statement being less than 21% as if you have reduced the profit figure to which you apply tax this will be a lesser proportion of the profit shown on the face of the income statement (in this case 17%).

 

We cannot say for sure exactly how Apple has reduced their tax bill without of course seeing their actual calculations but I imagine it has something to do with this

 

Let me know if any other questions

 

Lauren Warner

Lgwarn9@gmail.com

Share on Facebook
Share on Twitter
Please reload

Featured Posts

Dear C.S.S. Members and Colleagues:

Please find enclosed an inspirational message (click here) from my good friend and mentor, Christian Gerber. I invi...

An Invitation to the 5th Annual Codman Shoulder Society Meeting

May 1, 2018

1/2
Please reload

Please reload

Archive
Please reload