How Apple And Google Dodge Billions In Taxes
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U.S. companies don't have to pay U.S. taxes on money that is earned overseas as long as it's permanently reinvested offshore - so many companies have a huge portion of their cash sitting outside the U.S. This money will be subject to U.S. taxes if it's ever brought back inside the country. But this can be put off indefinitely. Even when Apple needs cash, for a buyback or dividend, it has the option of borrowing instead of using the cash it has overseas.
Companies make profits overseas by selling products to foreign buyers from foreign subsidiaries. Many tech companies employ tactics referred to as the "Double Irish" and the "Double Irish with a Dutch Sandwich" to move additional profits outside the U.S. These structures allow them to create subsidiaries in tax-friendly environments that hold their non-U.S. intellectual property rights and collect royalties on them from around the world.
Produced by Sam Rega and Sara Silverstein.