While the company has remade industries, ignited economic growth and delighted customers, it has also devised corporate strategies that take advantage of gaps in the tax code, according to former executives who helped create those strategies.
Apple, for instance, was among the first tech companies to designate overseas salespeople in high-tax countries in a manner that allowed them to sell on behalf of low-tax subsidiaries on other continents, sidestepping income taxes, according to former executives. Apple was a pioneer of an accounting technique known as the "Double Irish With a Dutch Sandwich," which reduces taxes by routing profits through Irish subsidiaries and the Netherlands and then to the Caribbean. Today, that tactic is used by hundreds of other corporations - some of which directly imitated Apple's methods, say accountants at those companies.
If Apple didn't use such methods to reduce its taxes it would have had a tax bill $2.4 billion higher, according to former Treasury Department economist, Martin A. Sullivan. Apple paid cash taxes of $3.3 billion on $34.2 billion in profits last year, a tax rate of 9.8%.