The New York Times recently reported on Apple’s tax strategy which involves funneling profits through a Nevada corporation with offices in Reno, Nevada. Apple has wisely taken advantage of Nevada’s non-existent corporate tax. In addition, Nevada does not have a corporate capital gains tax. While the tech giant is based out of Cupertino, California, Apple maintains a Reno office to collect and invest profits from its worldwide sales of iPods, iPhones, iPads, etc.
Estimates peg Apple’s current fiscal year profits at $46 billion, expected to be a record for an American business. By largely avoiding California’s corporate tax rate of 8.84 percent, the tax savings are substantial. Apple is not alone in seeking refuge in Nevada from the onerous California tax rates. Microsoft operates a revenue recording center in Reno, Nevada to avoid the state of Washington’s royalty tax.
Not only does Nevada have low, or non-existent corporate tax rates, but also Nevada’s corporate laws are second-to-none. Just a few of the protections afforded to Nevada entities are featured here. If Apple and Microsoft embrace doing business in Nevada, should others consider following their lead?