A published report claims that Apple uses subsidiary companies around the world to limit the amount of corporate taxes it pays annually - a practice the company staunchly defends in a rebuttal.
A New York Times report shines the spotlight on how Apple Inc. dodges a potentially large tax bill by using subsidiary companies located around the world.
The practice is not only perfectly legal, it's used by many other corporations as well.
One such Apple subsidiary is based in Reno, Nev., 200 miles away from the company's Cupertino headquarters.
There, a small staff collects and invests the iPhone maker's profits - and avoids paying an 8.84 percent California state income tax on this money in the process, since Reno's tax rate is zero.
"Setting up an office in Reno is just one of many legal methods Apple uses to reduce its worldwide tax bill by billions of dollars each year," the report revealed.
"As it has in Nevada, Apple has created subsidiaries in low-taxes places like Ireland, the Netherlands, Luxembourg, and the British Virgin Islands - some little more than a letterbox or an anonymous office - that help cut the taxes it pays around the world."
Apple had no comment on the story, and subsequently published a rebuttal in which the company cites the creation of "an incredible number of jobs" in the U.S. over the past several years, with more than 47,000 full-time employees in all 50 states.
"Apple also pays an enormous amount of taxes which help our local, state and federal governments," the company explained.
"In the first half of fiscal year 2012 our U.S. operations have generated almost $5 billion in federal and state income taxes, including income taxes withheld on employee stock gains, making us among the top payers of U.S. income tax.
"Apple has conducted all of its business with the highest of ethical standards, complying with applicable laws and accounting rules," the statement concluded. "We are incredibly proud of all of Apple's contributions."
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