Really interesting. Could apple lower the transfer price between it's US subsidiary and global operations subsidiary to lower the tax? It would likely be heavily scrutinised but companies often adjust transfer pricing between subsidiaries. But usually that involves one country (usually singapore) raising the transfer price to inflate their profits.
Regarding price hikes,
based on my calculations, apple would need to increase the price of the iPhone 16 pro by around 18% to maintain pre-tariff levels of profitability post tariff (depending on channel margins and landing cost are).
But like you, I am not convinced apple will raise prices. They have other levers to pull and actually can absorb the hit on the margins. They still will make money just not as much 😅
Transfer pricing already comes under close scrutiny from auditors, tax authorities and regulatory bodies. Given Apple's history (https://en.wikipedia.org/wiki/Apple%27s_EU_tax_dispute), I'm not sure that's a lever any company intends to pull these days!
I read that any price rise will make itself clear in the iPhone17 release. That makes sense I think.
Really interesting. Could apple lower the transfer price between it's US subsidiary and global operations subsidiary to lower the tax? It would likely be heavily scrutinised but companies often adjust transfer pricing between subsidiaries. But usually that involves one country (usually singapore) raising the transfer price to inflate their profits.
Regarding price hikes,
based on my calculations, apple would need to increase the price of the iPhone 16 pro by around 18% to maintain pre-tariff levels of profitability post tariff (depending on channel margins and landing cost are).
But like you, I am not convinced apple will raise prices. They have other levers to pull and actually can absorb the hit on the margins. They still will make money just not as much 😅
Transfer pricing already comes under close scrutiny from auditors, tax authorities and regulatory bodies. Given Apple's history (https://en.wikipedia.org/wiki/Apple%27s_EU_tax_dispute), I'm not sure that's a lever any company intends to pull these days!
I read that any price rise will make itself clear in the iPhone17 release. That makes sense I think.
Maybe Apple can hire some of these consultants for some "creative ways" ;)
https://www.ft.com/content/95f24517-baf6-412d-8c68-6695fa55933d