U.S. technology giants Apple, Microsoft, Google and Cisco Systems hold an estimated $124 billion in U.S. Treasury debt, much of it offshore, earning them tax-free interest, the UK's Bureau of Investigative Journalism (BIJ) said on Thursday.
The US government makes vast interest payments to technology giants including Apple and Microsoft on the billions of dollars they shelter from tax offshore.
A trawl of Securities & Exchange Commission (SEC) disclosures shows that Apple, Microsoft, Google and Cisco Systems hold $163 billion in US government debt, earning these companies substantial sums in interest.
This means American taxpayers in effect pay interest to tech giants on their offshore cash which is held there for tax reduction purposes.
However, there is no suggestion that any of the companies? activities are in any way unlawful.
London-based BIJ, a not-for-profit news organization, estimates that the four leading US digital firms have accumulated cash, cash equivalents and marketable securities worth $255bn in their foreign subsidiaries, which they state in SEC filings could be liable for corporation tax if repatriated to the United States.
The revelation that American taxpayers effectively pay tech firms interest as they shelter hundreds of billions from tax comes as a coalition of US digital companies resist international attempts co-ordinated by the OECD to close loopholes that allow companies to shift profits to low tax jurisdictions.
Apple, Microsoft, Google, and Cisco Systems hold cash, cash equivalents and marketable securities on their consolidated balance sheets totalling $333bn, making them America?s most cash-rich firms outside the financial sector.
SEC disclosures by these four companies shows that of this cashpile, $255bn is held in foreign subsidiaries that would be subject to tax if repatriated to the US.
Responding, Cisco said that it "pays all taxes that are due" and that "the cash held in Cisco's non-US subsidiaries is generated from Cisco's international operations."
Apple said: "We pay all the taxes we owe - every single dollar. We not only comply with the laws, but we comply with the spirit of the laws. We don?t depend on tax gimmicks. Apple carefully manages its foreign cash holdings to support its overseas operations in the best interests of its shareholders. Apple pays an extraordinary amount in US taxes."
The company added that it believes it is the largest corporate income tax payer in the US, having paid nearly $6 billion in taxes to the US Treasury in the 2012 financial year.