Apple has $117 billion in cash right now. And Zero Hedge has now noted that it's being managed for it by a rather bland company based in Nevada called Braeburn Capital. Apple does, of course, own Braeburn.
Why Nevada? Well, its as offshore as just about anywhere Apple could find. As Zero Hedge note, Braeburn simply has no duty at all to tell the world about its operations:
Braeburn has no reporting obligations: there is no Investment Advisor Public Disclosure (IAPD) entry on Braeburn for the logical reason that it is not an investment advisor: it merely manages an ungodly amount of cash for AAPL's millions of shareholders. There is also no SEC filing 13-F filing on Braeburn's holdings. As such, not confied by the limitations of being a "long-only", it is in its full right to hold any assets it feels like, up to and including CDS on housing, puts on Samsung, or Constant Maturity Swaps that pay if the 10 Year collapses. It just doesn't have to report any of them.
Nobody knows: and that's the beauty of Braeburn. It is the world's largest hedge fund that is not really a hedge fund, nobody has heard of, and nobody knows just what assets it holds.
Which is precisely what Apple wants.
So there's tax haven secrecy in Nevada.
And tax haven tax too. This is from Wikipedia, but it's reliable:
Nevada, like the state of Delaware, is well known as a corporate haven. Many major corporations are incorporated in Nevada, particularly corporations whose headquarters are located in California and other Western states.
Nevada's tax structure is also a large benefit to incorporation in Nevada. Nevada has no franchise tax. It also has no corporate income tax or personal income tax. While Nevada likes to promote that there are "no corporation taxes" in the state, there is an annual $200 "Business License Fee" which is paid to the Nevada Department of Taxation in some cases (but not all). Nevada and Texas are the only two states that do not have information sharing agreements with the Internal Revenue Service.
Look at that last one: even the IRS can't find out what's happening in Nevada!
So, the nub of it is that if Braeburn keeps its cash out of the US and manages it from Nevada its tax bill on $117 billion or more of cash may be $200. It could be more, but it need not be.
It makes me hate the Apple I'm writing this on.
Why can't a great company have great ethics? Because right now Apple stinks.
Hat tip: Dennis Howlett
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Agreed – Apple achieves the extraordinary feat of making Microsoft look like a nice company in comparison. And they are awful patent trolls to boot… (e.g. their dispute with Samsung).
Despite the fact that Apple makes nice kit, I’ve always avoided them because of stuff like this. I’ll probably be the last man standing with a Windows PC after Windows 8 (which is probably going to be a disaster) comes out.
if you think Microsoft don’t do things like this or at the very least evade tax your a fool.
Since I was involved in the first ever exposure of Microsoft’s tax arrangements in the Wall Street Journal in 2005 I think that is an allegation that is hard to make
Why not look at Apple accounts if you want to know what Apple does with its cash?
It sits on it
No, it funds the US economy with large holdings of US corporate debt and US treasuries. Someone always has to be ‘sitting on the cash’ that is funding other businesses/government.
The reason Apple doesn’t distribute it, is that by far the majority of it is offshore and will not be repatriated as Apple would then have to pay the tax on it.
I think that last point was implicit in my comments
I have seen some criticism of those comments on the web which ignored the very careful construction I used
This is yet another convincing reason that I don’t go along with the ‘cult’ of Apple. That, and the fact that, courtesy of this useless coalition, I have a pay freeze, increased pension contribution costs and ever rising rail fares so I have no great desire to spend hundreds of pounds on something I don’t really need.
And yet another reason why the financial sector shysters need to be brought to heel. Why are tax havens even allowed to exist?
Why are tax havens even allowed to exist?
Because the conspiracy of secrecy and silence is controlled from the City of London — the world’s most powerful centre of greed and corruption.
To exterminate fraudulent activities hosted in places like of Guernsey and the Isle of Man requires a dedicated effort to sanction the City and all those involved: a difficult, but as revelations of fraud continue to be exposed, not an impossible task.
But surely this proves the essential point….that if you have a great product that people want then no one cares about it being produced in China, that the workers are paid a few dollars a day surronded by suicide nets or that Apple carries out overt tax avoidance!
A successful company can ignore all these issues because the consumer does not care!
You really do embrace amorality, don’t you?
I wonder if you’ve ever cared?
I love the joy you evidently feel at the suicidal misery of the Apple workers! It is people like you who convinced me that conservatism was truly evil. Please carry on saying this stuff so that people understand what votes for conservative and right wing parties are all about.