Dow Jones Reprints: This copy is for your personal, non-commercial use only. To order presentation-ready copies for distribution to your colleagues, clients or customers, use the Order Reprints tool at the bottom of any article or visit www.djreprints.com See a sample reprint in PDF format. Order a reprint of this article now
EUROPE BUSINESS NEWS
Updated May 21, 2013, 11:01 a.m. ET
Apple Uses 'Alchemy' in Tax Practices
By DANNY YADRO N, KAT E LINEBAUG H and J ESSICA E. LESSIN
WASHINGTON—Apple Inc. turned to "alchemy" and "ghost companies" to pay no corporate income tax to any national government on tens of billions of dollars in overseas income over the past four years, U.S. Senate investigators said at a hearing Tuesday. Apple Chief Executive Tim Cook is set to testify before the panel later in the morning and propose changes to a tax code that provides American companies strong incentives to keep overseas earnings bottled up at foreign subsidiaries, according to prepared testimony. The disclosure of Apple's tax practices followed a lengthy examination of the technology giant by the Senate's Permanent Subcommittee on Investigations and fueled the debate over whether the U.S. tax code needs an overhaul. Sen. Carl Levin (D., Mich.), who heads the panel, said Tuesday he is an iPhone user himself. But he argued the firm has become overly creative with its tax practices. "Apple has sought the Holy Grail of tax avoidance," said Mr. Levin said. "Apple is exploiting an absurdity, one that we have not seen other companies use." Sen. John McCain, the ranking Republican on the panel, quipped that the Cupertino, Calif., company gave new meaning to its slogan "think different." Tuesday's hearing isn't expected to result in new U.S. tax policy or formal punishment of Apple. Kentucky Republican Sen. Rand Paul, who is mulling a 2016 presidential bid, said the gathering amounted to a "show trial." A corporate...