Apple avoids over $9bn in US taxes through debt deal

Scheme based around selling bonds in firm to avoid using taxable overseas funds

Apple has avoided over $9bn (£5.8bn) in US taxes through a debt deal, investors have estimated.

The firm recently sold $17bn (£11bn) in Apple bonds, the largest offering of this sort in corporate history, with the idea of the scheme to return value to shareholders.

According to Gerald Granovsky, a senior vice president at investment firm Moody's, Apple will avoid billions in tax by financing its stock buyback with debt rather funds stored overseas.

Apple's offshore cash stockpile is around $100bn (£64bn), and if the bond funds had come from that, the California-based producer of the iPhone and iPad would have been required to pay a rate of 35 per cent in taxes in order to bring it back into the US. The resulting savings work out at just over $9bn.

"From a pure corporate-finance theory perspective, this was a no-brainer," Granovsky told Bloomberg.

The reports of Apple's tax avoidance come at a time when corporations are under scrutiny globally over their tax policies and how much they actually contribute to countries around the world.

Google chairman Eric Schmidt recently defended the web firm's tax arrangements in the UK, arguing his company contributes a lot to the British economy. However, 2011 saw Google contribute just £6m to HMRC in corporate taxes, a rate of around one per cent.

The firm has been recalled to parliament to re-explain its UK tax arrangements, following an investigation which discovered Google could have sales staff based in the Britain, despite claims of not doing so. If the firm does indeed have sales staff based in the UK, rather than just in Ireland, it could be forced to pay more taxes.