Apple hoards 89% of cash overseas fearing high US tax rates

Apple, the maker of popular iPhone models, is hoarding about 89% of its total cash overseas, as it fears a hefty corporate tax rate in the US on repatriated foreign earnings.

According to a recent JPMorgan report, Apple has $158bn (£106bn, €146bn) of cash kept overseas – the largest among all S&P 500 companies.

Apple's hoardings are almost twice as much as second-ranked Microsoft which has $82.1bn of cash hoarded overseas and 2.5 times the total of General Electric, which has foreign cash holdings of $62.4bn.

Oracle comes in at number four with $40.3bn cash, followed by Google at $38.7bn. PC-maker HP keeps all of its $15.1bn cash holdings overseas.

US multinationals prefer to keep most of their cash overseas, as they would have to pay 35% corporate income tax once they repatriate their foreign earnings.

In order to address this issue, two US senators proposed a repatriation tax holiday earlier in 2015, which would enable companies to return money to the US paying just 6.5% tax.

The government intends to use the proceeds from the scheme to finance the Highway Trust Fund which is expected to run dry in May. It would also limit the use of the repatriated funds, prohibiting their use for stock buybacks or executive compensation and funnelling them towards investment beneficial to economic growth in the US.

In 2004, companies paid just 5.25% taxes on repatriated cash as part of a similar scheme. However, a congressional subcommittee later found that the measure had not been effective, as many of the companies that profited most went on to cut jobs and reduce R&D spending in subsequent years.

A Statista chart showing S&P 500 companies with the largest amounts of cash held abroad is given below.

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