thursday, 18 january of 2018

Apple pledges to invest $30bn and pay $38bn tax bill

Apple has pledged to invest more than $30bn to expand its American operations in the wake of last month’s US tax cut, even as it makes an estimated $38bn one-off tax payment on the repatriation of its overseas profits.

The iPhone maker said the investments — including a brand new US campus, data centres and more than 20,000 new jobs — would help it make a $350bn “direct contribution” to the US economy over the next five years.

Much of that contribution stems from its previously-planned spending with domestic suppliers, which it estimated would hit $55bn in 2018, up from $50bn last year.

The commitment to domestic investment is the largest yet by a US company since President Donald Trump signed the tax overhaul into law. Mr Trump has often criticised Apple and other large tech companies for their reliance on overseas manufacturing.

Apple’s estimated $38bn one-off tax payment “would likely be the largest of its kind ever made,” the company said on Wednesday.

In a tweet later on Wednesday afternoon, Mr Trump claimed credit for what he called a “huge win for American workers and the USA”.

“I promised that my policies would allow companies like Apple to bring massive amounts of money back to the United States,” Mr Trump tweeted. “Great to see Apple follow through as a result of TAX CUTS.”

However, Tim Cook, Apple’s chief executive, told ABC News that the Republican tax bill was only partly responsible for the move.

“There are large parts of this that are a result of the tax reform and there’s large parts that we would have done in any situation,” he said, adding: “I do believe the corporate tax [reform] will result in job creation and a faster growing economy.”

Apple’s announcement comes after a wide range of US companies have committed to step up domestic investment or raise wages and bonuses for US staff following the tax legislation. Walmart unveiled plans to raise its minimum wage from $9 to $11 and Fiat Chrysler announced $2,000 bonuses for about 60,000 employees.

In an internal email on Wednesday, Apple said it would give all of its more than 120,000 employees a $2,500 stock grant, which Mr Cook said showed “our support for our team and our confidence in Apple’s future”.

As part of its American investment pledge, the iPhone maker is expanding its US advanced manufacturing fund, first announced last May, from $1bn to $5bn. The fund has already invested hundreds of millions of dollars into American suppliers including Corning, maker of glass for the iPhone’s screen, and Finisar, whose optical components are used in the iPhone X’s “augmented reality” camera system.

Apple’s plan for another new campus comes just months after it opened Apple Park, its spaceship-shaped new headquarters in Cupertino. The new facilities, the location for which has not yet been announced, will be focused on technical support and will help create more than 20,000 new US jobs over the next five years, on top of the 84,000 it already employs across retail, engineering and other staff in America.

Apple’s campus expansion comes as Amazon is deciding where to place a second headquarters, after cities and regions across America showered the ecommerce group with offers and incentives to lure it to their locations.

Another $10bn of Apple’s planned investment will come from data centres to power its App Store, iTunes and iCloud services.

“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 US economy,” Mr Cook said earlier in a 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.”

(Published by Financial Times - January 17, 2018)

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