5 Companies Set To Benefit From Tax Repatriation

Tax Repatriation

A key inclusion in the recently approved United States Tax Cuts and Jobs Act is a one-time tax repatriation of cash that corporations currently hold overseas.

While corporate tax rates will decline from 35 percent to 21 percent, companies will be able to repatriate their money abroad ranging from 8 percent on illiquid assets and 15.5 percent for cash and cash equivalent earnings. According to Goldman Sachs, U.S. companies have approximately $3 trillion in overseas earnings, with technology businesses holding the lion's share.

The top technology leaders who store the most cash overseas who could benefit from the one-time tax repatriation are Apple, Cisco, Microsoft, Oracle and Google's Alphabet who have hundreds of billions outside the United States.


Total Cash: $262 Billion

Percentage of Cash Held Overseas: 94%

Apple has the most cash and cash equivalent funding stored abroad out of any IT company in the world. The Cupertino, Calif.-based consumer giant has approximately $246 billion overseas, accounting for roughly 94 percent of the company's total cash.

In an interview with NBC earlier this year, Apple CEO Tim Cook said he would potentially leverage the tax repatriation to add more jobs in the U.S. "Tax reform is sorely needed in this country," Cook said to NBC. "It should have been fixed years ago."

Apple spent billions in acquiring a total of nine companies in 2017, most recently music and image recognition startup Shazam for $400 million.


Total Cash: $70.5 Billion

Percentage of Cash Held Overseas: 96%

The networking giant has approximately $68 billion in cash overseas, accounting for about 96 percent of Cisco's total cash and cash equivalent. The San Jose, Calif.-based company holds the biggest percentage of its cash overseas compared to any vendor on this list.

Cisco CEO Chuck Robbins said in November that Cisco could use the one-time tax repatriation to do several different things from a capital investment perspective. "We see increased M&A. We see investments in innovation and innovation centers. We see the ability to do, obviously, dividends and buy-backs, as well. We'll leverage the cash across all aspects of our capital strategy. The territorial tax system just gives us more flexibility to move cash around as we need it depending on where we need to put it to use. The place we'd like to put it to use is the United States."

The network leader acquired a total of six companies in 2017, including BroadSoft for $1.9 billion and AppDynamics for $3.7 billion.


Total Cash: $138.5 Billion

Percentage of Cash Held Overseas: 95%

The Redmond, Wash.-based software giant has a whopping $131.5 billion held overseas. With a 15.5 percent tax on cash and equivalent earnings, Microsoft would pay roughly $21 billion to bring all its overseas money back into the U.S.

Microsoft CEO Satya Nadella and other top executives have been relatively quiet on commenting on tax repatriation. The company did not respond to a request for comment by press time. Microsoft acquired a total of eight companies in 2017, including cloud computing orchestration firm Cycle Computing to bolster its Azure platform.


Total Cash: $67 Billion

Percentage of Cash Held Overseas: 87%

Redwood City, Calif.-based Oracle is storing the fifth largest amount of cash overseas at $58 billion in the tech industry. Oracle's co-CEO Mark Hurd is a strong supporter of the tax repatriation.

"You see us raising debt in the United States because of our inability to access our cash offshore," said Hurd in a recent interview with CNBC. "So the fact that we can repatriate our money allows us a much more efficient use of cash but an opportunity again to invest it back into various things that we do whether its mergers and acquisitions, new facilities, or hiring more employees."

Oracle acquired four companies in 2017, including project management software specialist Aconex in December for $1.2 billion.

Google Alphabet

Total Cash: $107 Billion

Percentage of Cash Held Overseas: 56%

Google's parent company Alphabet has approximately $60 billion in cash currently overseas. However, that number represents only 56 percent of the Mountain View, Calif.-based company's cash worldwide.

Alphabet CEO Larry Page was one of several technology leaders who met with then President-Elect Donald Trump in December 2016 for a roundtable business discussion. Page has been quiet on commenting on tax repatriation. Alphabet did not respond to a request for comment by press time.