Apple’s tax strategies lead to 9.8% tax rate

Apple’s tax strategies allow it to pay an effective tax rate of just 9.8% worldwide, according to a report in the New York Times.

The article notes that Apple has found legal ways to allocate around 70% of its profits outside the US, leading to federal tax savings estimated at $US2.4 billion per year in the US alone.

Techniques reportedly used by Apple include directing all iTunes sales from Europe, the Middle East and Africa through Luxembourg, as well as collecting patent its royalties in Ireland at a company tax rate of 12.5%, rather than 35% in the US.

Apple also legally avoids state taxes within the US by holding US assets through a subsidiary based in Nevada, where the state company tax rate is 0%, rather than California, where the company tax rate stands at 8.84%.