US tech giants and the (untaxed) billions in offshore accounts
A recently released report by advocacy group Citizens for Tax Justice has revealed the staggering amount of money being held in offshore accounts by US technology firms.
Offshore Shell Games 2015 discloses that almost 72 percent of businesses listed on the Fortune 500 operated tax haven subsidiaries as of the end of last year.
Apple was the worst offender, holding $181.1 billion in offshore accounts, which means that the company would owe an additional $59.2 billion in US taxes if these profits were registered domestically. Instead, because Apple has structured its two Irish subsidiaries as tax residents of neither the US, nor Ireland, it is able to avoid paying tax to either government on the majority of its profits.
However, Apple is far from the only technology firm under the microscope. Microsoft revealed that it had five subsidiaries in tax havens last year, a 50 percent reduction on the 10 disclosed in 2007. Despite this, the amount of money the company held offshore actually increased by a factor of 14, with the firm paying a tax rate of just three percent to foreign governments on its profits.
Cisco, Google, Oracle and Hewlett-Packard are also mentioned in the report, alongside a number businesses outside the technology industry. In total, the use of tax havens by multinational companies enables them to avoid paying an estimated $90 billion in federal income tax. Researchers from Citizens for Tax Justice describe how just how easy it is to register an offshore tax haven subsidiary.
"There is no greater symbol of the excesses of the world of corporate tax havens than the Ugland house, a modest five-story office building in the Cayman Islands that serves as the registered address for 18,857 companies", the report reads. "Simply by registering subsidiaries in the Cayman Islands, US companies can use legal accounting gimmicks to make much of their US-earned profits appear to be earned in the Caymans and thus pay no taxes on those profits".
In order to prevent the abuse of offshore havens, the report advises ending the incentives of profit shifting, rejecting the creation of new legislative loopholes and increasing corporate transparency.
Published under license from ITProPortal.com, a Net Communities Ltd Publication. All rights reserved.
Photo credit: Jean Lee / Shutterstock