Congress has just passed the Republican tax overhaul. The overall will make it affordable for Apple to repatriate the $252.3B cash it currently holds overseas. Instead of paying the previous tax of 35% Apple would be able to take advantage of a one-time tax break, paying just 15.5% tax on the cash.
There is a catch to this bill which also introduces a minimum tax of around 13% on income from patents held overseas, and this could put an end to one method Apple has used to reduce its tax bill. If Apple chose to bring all of the cash back to the US, it would pay $39.1B in tax instead of $88.3B. Apple has already set aside $36.3B – almost the entire amount – for exactly that eventuality.
The ne catch in the bill means that it will no longer matter where the patents are held Apple will still have to pay US tax on the revenue assigned to them.
To further discourage companies from assigning patents to overseas subsidiaries, the tax bill also reduces the tax on patent income within the USA. This falls to 13.1%, meaning that Apple Inc might as well hold onto ownership of future patents, as there’s little to no benefit in shipping them off to tax havens.