Apple Leaves Overseas Cash Out of Its Latest Quarterly Report

(Bloomberg) -- A key figure disappeared from Apple Inc.'s latest quarterly report. It's also gone from the regulatory filings of Netflix Inc., Microsoft Corp., Google's Alphabet Inc. and Oracle Corp.

Cash held overseas.

There's nothing rule-breaking about leaving it out -- some tax experts say it makes perfect sense -- but the move could make it more difficult to gauge whether one of the federal tax changes enacted last year is stoking corporate investment in the U.S., as the Trump administration said it would.

Cupertino, California-based Apple, which at one time had $252 billion stockpiled abroad, said it plans to repatriate money, but hasn't reported foreign cash holdings since September. Microsoft stopped at the end of last year. Google, Oracle and Netflix discontinued the disclosure this year.

The tax regime signed into law in December by President Donald Trump requires American-based companies to pay tax on money they've stashed outside the U.S. The new rules set a one-time rate of 15.5 percent on cash and 8 percent on non-cash or illiquid assets. Payments can be made over eight years. Previously, companies had to pay 35 percent, but only if they brought the money back to the U.S.

“The primary reason for the disclosure in the first place was that cash located in a foreign subsidiary was not the same as cash already in the U.S.,” said J. Richard Harvey, a professor at the Villanova University law school and graduate tax program in Pennsylvania. “It makes sense that U.S. multinational corporations would stop disclosing the amount of cash held overseas.”

But the lack of disclosure makes it more difficult to calculate whether the new tax is ending what the Treasury Department called a “perverse incentive to keep foreign profits offshore.”

Apple and Redwood City, California-based Oracle declined to comment. Google, Los Gatos, California-based Netflix and Microsoft, based in Redmond, Washington, didn't respond to requests for comment.

Mountain View, California-based Google, for example, said in its latest quarterly statement that for March 31, 2018, it recorded a “tax liability for the one-time transition tax on accumulated foreign subsidiary earnings of $10.2 billion.” Google last reported offshore cash holdings of $62.8 billion.

Facebook Inc., which continues to disclose its overseas cash holdings, reported a record $20.1 billion last quarter. That's $4 billion more than what it held at the end of last year.

Ending the disclosure seems to be more exception than rule. Tech giants like Qualcomm Inc. and Cisco Systems Inc. have continued to put out a number. So have Coca-Cola Co. and rival PepsiCo Inc., as have companies such as Caterpillar Inc. and General Electric Co. Of those companies, Coca-Cola, Caterpillar and GE have reduced their offshore holdings.

“Repatriations will be, in the grand scheme of things, relatively modest and opportunistic,” said Robert Willens, a tax and accounting adviser in New York. “I'm not sure that companies, certainly at this stage of the business cycle, are going to aggressively expand their plant and equipment balances in anticipation of even greater demand for their products.”

--With assistance from Vivian Li

To contact the reporter on this story: Brandon Kochkodin in New York at bkochkodin@bloomberg.net.

To contact the editors responsible for this story: Joe Weisenthal at jweisenthal@bloomberg.net, Bob Ivry, Alexis Leondis

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