A recent US government report acknowledges that U.S.-based global companies are increasingly shifting profits into offshore tax havens

By Geoffrey Weg and Mayer Nazarian

Mayer Nazarian

Geoffrey Weg

Among the findings: American multinational companies reported 43% of their overseas profits in the tax havens studied - Bermuda, Ireland, Luxembourg, the Netherlands, and Switzerland - in 2008, the most recent year data was available. 

 

At the same time, these same companies hired only 4% of their foreign workforce and made just 7% of their foreign investments in these same countries.

 

"By all indicators examined in this report, profit shifting has generally trended upward over time," the report said.  The analysis found this trend increasing since 1999. 

 

U.S.-based corporations are paying among the steepest corporate tax rates of all industrialized countries.  The report acknowledged that the high U.S. tax rate gives an incentive for companies to move profits abroad, a finding likely to fuel debate over the taxes corporations pay and their flexibility in locating profits.

 

The Congressional Research Service (“CRS”), a nonpartisan research arm of Congress used by lawmakers, analyzed profit data from multinational companies and compared reported profits and other business activity in lower-tax jurisdictions versus higher-tax countries like the United Kingdom and Canada.  The data were compiled by the Bureau of Economic Analysis, a unit of the Commerce Department that collects economic data from non-financial companies with foreign affiliates.

 

The Tax & Wealth Planning Group at Valensi Rose, PLC is experienced in advising and helping clients create tax efficient strategies for domestic and offshore business activities.

Contact; Geoffrey Weg   

Contact: Mayer Nazarian