Apple Boss Cook Grilled Over Tax

Apple (NasdaqGS: AAPL - news) boss Tim Cook is giving testimony to a US senate committee over claims the company has used Irish subsidiaries to avoid billions in taxes.

He said Apple complied with both the spirit and the letter of the law and did not use tax "gimmicks".

Mr Cook said he recommended a "dramatic simplification" of corporate tax to encourage companies to bring more of their money earned abroad back to the US.

He told the committee that 70% of the company's cash was held abroad and that the current tax system made it too expensive to repatriate the money to the States.

Giving testimony alongside Apple's chief financial officer, and its head of tax, Mr Cook claimed that Apple was the biggest payer of US corporate tax, contributing $6bn in 2012.

Mr Cook said Apple's Irish subsidiaries employed 4,000 people in Ireland (Other OTC: IRLD - news) but admitted that three of them did not have an official tax residency.

The Apple CEO was called upon to defend his company after a senate investigation discovered Apple holds about $102bn (£67bn) in cash overseas, and an Irish subsidiary that earned $22bn in 2011 paid only $10m in taxes.

The report, compiled by the Senate Permanent Subcommittee on Investigations, estimated Apple avoided at least $3.5bn in US federal taxes in 2011 and $9bn in 2012 by using the strategy.

Earlier, Senator John McCain said Apple had "violated the spirit of law if not the letter of the law".

He added: "It is unacceptable that people like Apple are able to avoid paying billions of dollars in taxes."

"Apple's three companies in Ireland hold 60% of the company's finances but claim to be subject to taxation nowhere in the world."

However, Senator Rand Paul defended Apple's taxation practices, pointing out the company had done nothing that could be deemed illegal.

He said: "Tell me what Apple has done that is illegal?... I am offended that Congress should convene a hearing to bully one of America's most successful companies."

More follows...