Apple has long sparked criticism for its deference of tax payments of foreign earnings, facing allegations of hoarding its cash overseas to dodge tax responsibilities. In total, the company is estimated to hold a staggering 94 percent of its total cash holdings of around $294 billion outside of the U.S. For years, it has insisted it would not bring that cash back to the U.S. until revisions to the corporate tax code were made, as doing so would be too costly. It looks like that could soon change.
In January, Apple announced its plans to repatriate the majority of the $252 billion it holds in cash in jurisdictions outside of the U.S., which it contends is the largest reinvestment into the U.S. economy of its kind. With the move, Apple is taking advantage of a provision in President Trump’s new tax bill, which was signed into law in December 2017. The provision gives companies the opportunity for a one-time repatriation of cash, essentially allowing them to bring cash back to the U.S. from overseas at a lower tax rate. While the company has declined to comment on the specific size of the repatriation, Apple has said it will make a one-time payment of $38 billion on the repatriated cash.
Apple has grand plans for the cash it is bringing back to the U.S.
“Apple expects to invest over $30 billion in capital expenditures in the U.S. over the next five years and create over 20,000 new jobs through hiring at existing campuses and opening a new one,” the company announced in a statement.
The company also plans to invest in domestic supplies and manufacturing partners and spend on STEM education for students.
“Apple is a success story that could only have happened in America, and we are proud to build on our long history of support for the U.S. economy,” Tim Cook, Apple’s CEO, said in the statement. “We believe deeply in the power of American ingenuity, and we are focusing our investments in areas where we can have a direct impact on job creation and job preparedness. We have a deep sense of responsibility to give back to our country and the people who help make our success possible.”
Apple faced criticism and derision from President Trump throughout the duration of his campaign. Several times on the campaign trail, he pledged to force the company to manufacture its products in the U.S. instead of overseas. That has not yet happened, and analysts agree it is unlikely, but President Trump has hailed the repatriation as an indication of the success of his tax policies, which aim to stimulate economic growth by slashing corporate taxes.
“I promised that my policies would allow companies like Apple to bring massive amounts of money back to the United States,” President Trump tweeted on Jan. 17. “Great to see Apple follow through as a result of TAX CUTS.”
Shares in the company rose an impressive 1.7 percent following the announcement, and Apple has estimated that the move will have a direct impact on the U.S. economy worth an estimated $350 billion over the course of the next five years. It is estimated that other tech giants may follow suit – with speculation that companies like Microsoft, Alphabet, and Cisco may also repatriate cash to the U.S.