A day ahead of CEO Tim Cook's planned appearance in front of the US Senate
, Apple has published its official testimony (PDF
) for the Senate Permanent Subcommittee on Investigations. In the document, the company lobbies for corporate tax reform, specifically arguing that the government should be "revenue neutral, eliminate all corporate tax expenditures, lower corporate income tax rates; and implement a reasonable tax on foreign earnings that allows free movement of capital back to the US." Apple has roughly $100 billion in overseas cash, which it has refused to repatriate unless it can pay less than the standard 35 percent tax rate.
"As both a pioneer and participant in the American innovation economy, Apple looks forward to working with the Subcommittee on its efforts to encourage comprehensive reform of the US corporate tax system," the company claims. "Apple appreciates the opportunity to appear before the Subcommittee to contribute constructively to this important debate."
The testimony also sees Apple continuing
to repeat certain talking points, for instance highlighting its status as one of the US' biggest corporate tax payers, and insisting that it doesn't use any "tax gimmicks" to avoid paying a fair share. "Apple does not move its intellectual property into
offshore tax havens and use it to sell products back into the US in order to avoid US tax; it does not use revolving loans from foreign subsidiaries to fund its domestic operations; it does not hold money on a Caribbean island; and it does not have a bank account in the Cayman Islands. Apple has substantial foreign cash because it sells the majority of its products outside the US. International operations accounted for 61% of Apple's revenue last year and two-thirds of its revenue last quarter," the company states.
The testimony does confirm though that Apple took out debt to finance its cash return program for shareholders because it would cost less than repatriating money. "If Apple had used its overseas cash to fund this return of capital, the funds would have been diminished by the very high corporate US tax rate of 35% (less applicable foreign credits). By contrast, given today's historically low interest rates, issuing debt at a cost of less than 2% is much more advantageous for the Company's shareholders. Because Apple was able to borrow at a cost lower than the cost of its equity, issuing debt lowered Apple's overall cost of capital. Additionally, issuing debt served the interests of Apple's shareholders because [of] the debt's interest."
Cook will likely repeat many of these points when speaking in front of the Senate, but might have more to say in response to questions.