Re: Eh?
Like most countries, the US does not tax the earnings of a foreign corporation until those earnings come back ('repatriated') to its US holding company via dividends. There are exceptions, eg. Controlled Foreign Corporations, whose earnings are deemed to have been repatriated, if you like, so that those foreign earnings are taxed in the US even though the cash never never goes anywhere near the US.
Most large multinationals set up their corporate structures so that foreign 'subsidiaries' are not considered CFCs. This ensures no US tax is paid until the cash actually comes back into the US.
It's usual for the US to allow a reduction in the US tax bill for the amount of foreign taxes paid (so that there's no double-payment of tax) but it's likely, in Apple's case, that little or not foreign tax has been paid because the foreign corporations are located in low-tax counties like Ireland (company tax rate = 12.5%).
The upshot of all of this is that when the foreign earnings are repatriated (eg. so that the holding company can pay dividends or return capital to its shareholders) there is a large US tax liability that must be paid.
No one likes paying tax (except Labour-voting lefties and, even then, they prefer someone else pays it, not them) and there are many US corporations with the same problem as Apple.
It appears Apple's solution is to keep the cash offshore but raise new cash by issuing bonds to investors, and then use this new cash to pay shareholders. The bonds require regular interest payments, of course, but this can be met (in part) by the interest income on the deposits the foreign company has. Of course, there's some fiscal drag (since deposit rates are lower than borrowing rates) but maybe Apple has a plan for this, eg. invest in its own debt so that it's a cash merry-go-round - but with out the tax liability.
Now that really would be a tax shag.
Biting the hand that feeds IT
