Month: August 2016

Business Apple’s Tax Game Is Hurting Economic Growth

 

by Nanette Byrnes August 30, 2016

$14.5 billion: that’s how much the European Union has ruled Apple owes Ireland in back taxes.

It’s a big number, though not nearly the tax bill Apple would owe the U.S. if it pulled the $92 billion in profits it is currently storing in Irish and other overseas accounts back to its home country.

CEO Tim Cook says 40 percent of that would go in taxes to the U.S. and state governments, an amount he recently told the Washington Post Apple would not be willing to pay. “It’s not a matter of being patriotic or not patriotic,” Cook said. “It doesn’t go that the more you pay, the more patriotic you are.”
Cook thinks the tax law should be changed and U.S rates lowered.

As for the EU tax ruling, he vowed to appeal. “At its root, the Commission’s case is not about how much Apple pays in taxes,” he wrote. “It is about which government collects the money.”

But no government seems to be collecting very much. According to the EU, Apple’s corporate tax rate in Ireland has been as low as 0.005 percent in recent years. And an extensive review of the company’s tax practices performed by the U.S. Senate’s Permanent Subcommittee on Investigations in 2013 found that Apple pays taxes of less than 2 percent on its overseas income, and significantly less than the 35 percent U.S. statutory corporate tax rate on its domestic income.

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Many applaud companies for making smart financial moves, including minimizing what they pay in taxes. But there are consequences to Apple’s decision to make global tax planning one of its core capabilities.

While the company’s money sits in foreign accounts, it is being invested in securities like U.S. Treasuries, stocks, and other investments, not in the kind of research that could help to generate new tech breakthroughs, innovation, and jobs.

Apple has consistently spent less than competitors on research. Even in 2015, when it put a record $6 billion into R&D, that was just 3.3 percent of its $183 billion in revenue. By contrast, Intel spent more than 20 percent of its 2015 revenue on R&D. Microsoft spent 13 percent, Google 15 percent, and Amazon more than 10 percent, all according to data compiled by PricewaterhouseCoopers.

Apple has more cash than any other company—$216 billion in total, according to Moody’s Investors Service. But spending it would mean bringing it back to the U.S. and paying taxes on it. It’s far cheaper to borrow money, and that’s exactly what Apple has done, going from debt-free as recently as 2012 to $80 billion in debt as of March this year.

That money has gone to finance much of the company’s current spending, which includes a large program to buy shares back. Such buybacks help support a company’s stock price, but do little to stoke innovation.

Apple isn’t the only company hoarding profits overseas, either: Microsoft has $108 billion overseas, and General Electric has $104 billion. It’s a trend that’s helping to create a disparity between corporate performance and overall economic growth. Recent research by a trio of Columbia Business School professors found that under current tax rules and practices, less profit is being channeled into U.S. investments, contributing to lower overall economic growth.

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Four aggregators working with home chefs shut shop

GURGAON: If cab aggregators can do such fine business, why not food aggregators?

Eating, after all, is as necessary and universal as travelling. It’s this thought that drove a large appetite for the food tech business in the city last year with around eight startups laying out the tables to suit all your taste buds.

But a year on, the tables have turned with half of the startups shutting down. The closures came in quick succession over the last three months as Cyberchef ..

All these startups were aggregators that networked with home chefs to deliver food to customers who ordered through apps or websites. Cyberchef, the most recent to shut, had an ugly closure with several home chefs this correspondent spoke to as well as the vendors working with the company alleging it hadn’t cleared their payments. “I worked with Cyberchef for around eight months and payments were always late. I kept writing to them and then they suddenly suspended operations,” said Simran Bagga, ..

India world’s third biggest tech startup hub: Study

NEW DELHI: India is home to the third largest number of technology driven startups in the world, with the US and the UK occupying the top two positions, according to a report.

The study, done by Assocham in association with Thought Arbitrage Research Institute, also revealed that Bengaluru is host to the largest share of technology startups in the country, followed by Delhi NCR and Mumbai, while Hyderabad and Chennai are also quite popular among budding tech entrepreneurs.

“In the technology driven startups, India has moved up to third position with the US occupying the top position with more than 47,000 and the UK with over 4,500.

“India’s tech startups numbered around 4,200 up to 2015,” the report pointed out.

In terms of total number of startups, comprising both tech and non-tech areas, India again figured among the five largest hosts in the world, along with China (10,000 each).

The US occupies the top slot with 83,000 st ..

IT hub Bengaluru is host to 26 per cent of domestic tech startups, followed by Delhi NCR (23 per cent) and Mumbai (17 per cent). In the ‘catching up’ category were Hyderabad (8 per cent), Chennai and Pune (6 per cent each).

“The disruptive innovation in technology and process is creating newer Indian startups and foreign investors, including some of the well-known venture capital funds, are showing immense interest in these startups,” Assocham President Sunil Kanoria said.
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Nykaa.com to raise Rs 80 crore, aims to double sales by FY18

The Economic Times

NEW DELHI: Online beauty retailer Nykaa.com is in talks to raise Rs 80 crore by end of this year to push growth as it aims to double sales to Rs 720 crore by 2017-18.

“We are in advanced talks to raise Rs 80 crore. We are looking at diluting 10 per cent equity and expect to close the funding by December this year. We are growing at a fast pace and we are aiming for Rs 720 crore gross merchandise value (sales) by fiscal 2018,” Nykaa.com Founder and CEO Falguni Nayar told PTI.

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Nykaa.com is expected to close this fiscal with sales of Rs 320 crore.

Online beauty retailer is also looking at omni-channel presence to achieve growth targets and plans to open about 26 more retail outlets by 2020.

“While online is our main focus, we are interested in omni-channel strategy and are looking at an interplay of offline and online presence. We plan to have 30 retail outlets by 2020,” Nayar said.

At present, the company operates four outl ..