The Trump administration’s tax reform law has proved a windfall for companies, as it reduced the corporate tax rate and provided incentive for repatriating cash held overseas.
The corporate tax rate is now lowered from 35 percent to 21 percent, and bigger companies can now repatriate overseas profits held as cash at a reduced rate of 15.5 percent. For repatriating illiquid assets, the relevant tax rate is now a more modest 8 percent.
Apple Inc. (NASDAQ: AAPL) said on its earnings call that it plans to spend the repatriated profits, aligning its cash with the debt.
In a December note, KeyBanc Capital Markets analyst Andy Hargreaves said he expects Apple’s potential tax rate to change from the current 25.5 percent to 12.3 percent in 2018.
The Cash-Debt Balance
Apple ended the fiscal first quarter 2018 with cash, plus marketable securities, of $285.1 billion, up $16.2 billion from the previous quarter. About 94 percent of it was held overseas, the company said on its…